Asia's butadiene-naphtha spread drops $121/mt to hit 5-month low Aug 12

Asia's butadiene-naphtha spread fell $121/mt day on day to hit a five-month low of $289.25/mt on Aug. 12, data from S&P Global Commodity Insights showed, driven by rapidly falling butadiene prices stemming from heavy supplies.

The Asian butadiene market has been under pressure amid rising supplies in China, sources said.

On Aug. 12, the spread was lower than a typical breakeven spread of $300-$350/mt, the data showed, with the CFR China butadiene price falling $110/mt day on day and assessed at $1,000/mt, the lowest level since February 9, 2022, when it was assessed at $950/mt.

Meanwhile, the CFR Japan naphtha price was assessed at $710.75/mt Aug. 12, down $4.25/mt on the day, the data showed.

China's Shanghai Petrochemical restarted its 120,000 mt/year butadiene plant in Shanghai earlier in the week of Aug. 7, sources close to the company said Aug. 12. The plant was shut following a fire at its monoethylene glycol plant on June 18, S&P Global reported previously.

China's Sinopec Maoming Petrochemical also plans to restart its 50,000 mt/year butadiene plant in mid-August, sources close to the company said Aug. 11. The butadiene plant was idled in mid-April for 50 days of annual maintenance, S&P Global reported earlier. The butadiene plant was initially scheduled to restart in early June, but a fire at a steam cracker on June 8 delayed it.

In addition, Zhejiang Petrochemical plans to raise the operating rate of its new 250,000 mt/year No. 3 butadiene plant in Zhejiang to 100% after mid-August, a company source said on Aug. 10.

Trading sources said there will be around two-three spot cargoes available from China for exports in a bid to clear excess supplies. However, buying appetite in South Korea -- a key buyer of China-origin cargoes -- has been bearish due to lower downstream plant operations, such as synthetic rubber. Some market sources said South Korea's rubber plant operations are around 40%.

Looking forward, market sources said the price spread between butadiene and naphtha would continue to narrow as Asia butadiene would remain bearish for the time being.