CFR China-FOB Korea butadiene price spread hits five-month low

The butadiene price spread between CFR China and FOB Korea was calculated at minus $80/mt Jan. 7, the lowest since Aug. 27, 2021, as South Korea-based suppliers are now looking at the US market to move their cargoes, S&P Global Platts data showed.

China's butadiene market was seen to be bearish amid rising butadiene production.

On Jan. 7, the CFR China butadiene price was assessed at $600/mt while the FOB Korea butadiene price was assessed at $680/mt, according to Platts data. Market sources said the price spread would likely remain in negative territory in the near term.

Ex-Korea butadiene fixed to US

For January to February, four cargoes totaling 21,500 mt have so far been fixed from South Korea to the US. A 5,500-mt cargo for loading from South Korea in January has been fixed in the high-$600s/mt FOB Korea to the US.

For February loading, three cargoes totaling 16,000 mt have been fixed. Of the total, two cargoes were fixed on a US Contract Price-based formula, while another cargo was sold in the low-$700s/mt FOB Korea.

An arbitrage window from Asia to the US remained wide open. According to Platts data, the CIF USG butadiene price was assessed at 55 cents/lb Jan. 7, or $1,212.20/mt, Platts data showed. The price spread between the US and Korea is now calculated at $532.20/mt, higher than the typical freight cost of $300-$350/mt, the data showed.

China supplies

China's butadiene supplies are seen to be higher in January than December, in line with the start of existing and new butadiene plants, according to market sources. China's Sinopec Zhenhai Refining & Chemical Company, or ZRCC, plans to start its new 165,000-mt/year butadiene plant in Ningbo in the week of Jan. 7, according to market sources.

Sinochem Quanzhou plans to restart its 127,000-mt/year butadiene plant in Quanzhou in the second-half of January after maintenance, Platts reported earlier.

China's Nanjing Chengzhi Clean Energy Company restarted its 100,000-mt/year butadiene plant in Jiangsu early January. The plant was shut down in the middle of October 2021 to comply with initiatives by the Chinese government to reduce carbon emissions, Platts reported earlier.