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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.

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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.