Singapore-based butadiene (BD) producers have been forced to raise exports after the shutdown of Arlanxeo's Jurong Island facilities removed a key outlet for their supplies, putting further downward pressure on prices.
Second-half May loading supplies of the synthetic rubber feedstock originating from Singapore petrochemical producer PCS and Shell Chemicals have been offered to potential buyers in China, Taiwan and South Korea. A 2,000t Shell-origin shipment was sold at $310/t cfr China early this week, market participants said, although this could not be confirmed.
Arlanxeo has shut its 100,000 t/yr butyl rubber (BR) and 140,000 t/yr polybutadiene (PBR) units on Jurong Island over the past few weeks, according to market participants. This has not been confirmed by the company. The shutdowns were caused by weak demand and manpower constraints resulting from Singapore's "circuit-breaker" restrictions to combat the Covid-19 outbreak, which are scheduled to run for rest of this month.
It is unclear when Arlanxeo, a wholly owned subsidiary of Saudi Arabia's state-controlled Saudi Aramco, will resume production from its Singapore units. The company declined to comment. Arlanxeo's units use BD as a feedstock.
Asia-Pacific BD prices have fallen sharply since mid-March because of an influx of cargoes from Europe. Cfr northeast Asia prices are at the lowest levels since Argus' records began in 2005.
European cracker operators have been switching to naphtha rather than LPG as a feedstock because of relatively lower prices of naphtha. The change in feedstock slate results in higher yields of BD. The rise in supplies has come just as automotive industries are operating at very low rates because of the coronavirus outbreak, sending more European supplies to the Asia-Pacific market.
BR and PBR are widely used in tire production in the automotive sector. The synthetic rubbers are also used to produce soles for shoes, as well as in a range of consumer products such as basketballs.
