Asia BD may surpass USD3,000/tonne in January

(ICIS) -- Butadiene (BD) prices in Asia may rise above USD 3,000/tonne (EUR 2,310/tonne) in January as traders snap up dwindling stocks ahead of the Lunar New Year, traders and producers said.

Spot offers for January shipments have increased to USD 3,100/tonne FOB (free on board) Korea amid market talk that some Japanese traders have bought cargoes at around this price level.
With intra-regional freight costs at USD 60-80/tonne, this would mean that January shipments would cost USD 3,160-3,180/tonne CFR (cost & freight) northeast (NE) Asia.

In the week ended 23 December, spot prices were at USD 2,800-2,850/tonne CFR NE Asia, according to ICIS.
BD prices in Asia have rebounded sharply since bottoming out at USD 1,550-1,600/tonne CFR NE Asia in the week ended 11 November.

Cracker production cutbacks in China, South Korea and Taiwan, coupled with a surge in pre-Lunar New Year buying have seen BD prices in Asia doubling since the middle of November.
⌠We are getting more enquiries as there is a lot of interest from traders and China buyers to procure material before the Lunar New Year, a Korean supplier said.

China will be closed on 22-28 January for the Lunar New Year festivities.
January will be a short trading month as several countries in Asia including Hong Kong, South Korea, Taiwan, Singapore, Malaysia and Vietnam also celebrate the holiday.

However, resistance to the relentless BD price spikes is rising as several downstream styrene butadiene rubber (SBR) and butadiene rubber (BR) producers in China, South Korea and Taiwan have said they will cut the operating rates of their respective plants to 70-80% of capacity in January.
BD is a major feedstock for SBR and BR, the main raw materials used to make tyres for the automotive industry.

The SBR and BR markets are not expected to strengthen for the rest of the first quarter, which is a seasonally a slow demand quarter for the tyre-making industry.
The ongoing eurozone debt crisis and concerns over a global slowdown have also dampened buying sentiment as Asia is a major production centre for the global tyre market.
Many synthetic rubber producers expect demand to weaken after the Lunar New Year, which will in turn dampen demand for BD.

MRC

(bbc.co.uk) -- China has gained potential access to millions of barrels of oil after it won approval for oil exploration and extraction in Afghanistan.

The country's cabinet approved a deal to allow China National Petroleum Corporation (CNPC) to develop oil blocks in the Amu Darya Basin. The basin is estimated to hold around 87 million barrels of oil.

The deal comes as China is looking to expand its oil resources in wake of a growing domestic demand.

"The Afghan cabinet has ordered mines minister Wahidullah Shahrani to sign an oil exploration contract for Amu Darya with China National Petroleum Corporation," Afghanistan president's office said in a statement.

The state-owned CNPC will carry out the oil exploration and extraction with a local partner, the Watan Group.

CNPC will have to spend a considerable amount of money to explore the basin before it can actually find out about the amount of oil that may exist there.

"It is about five to ten years before they can get a feel of what is under the ground and start commercially producing it," he added.

The approval is a major win for China as it has been looking to invest in resource-rich Afghanistan. However, analysts said that resources is not the only sector that China is looking to invest in.

"The deal is a way of getting a foot inside the door," said Charles Chaw of China Knowledge Consulting.

The ongoing war in Afghanistan has seen its infrastructure and economy being damaged.

Analysts said that as peace returns to the country, it will require a lot of rebuilding activity in order to trigger economic growth in coming years, something that China is keen to tap into.

MRC

(Reuters) -- China's top energy companies PetroChina Co Ltd and China Petroleum & Chemical Corp (Sinopec) have signed an agreement with the eastern province of Zhejiang on six projects worth about 139.1 billion yuan (USD 22 billion), media reported.

Among the top projects signed are two refinery-petrochemical complexes.
PetroChina is tying up with Royal Dutch Shell Plc and Qatar Petroleum to build a 400,000-barrel-per-day refinery and 1.2-million-tonne-per-year ethylene plant in Taizhou, the companies have said.
The project, with an approximate cost of USD 12.6 billion, has yet to receive environmental clearance from the central government, a key step before final approval by the National Development and Reform Commission.

The China Chemical Industry News reported that Sinopec would build an integrated plant in Zhenhai at a similar cost, without giving details.
An industry executive told that Sinopec, Asia's top refiner, wanted to expand its existing refinery-petrochemical complex in Zhenhai, home to a 460,000 bpd refinery and 1 million tpy ethylene facility.
"Sinopec wants to build another 300,000 bpd refinery and a 1.3 million tpy ethylene plant, an investment that may materialise after 2015," said the official.

The agreements also included a proposed liquefied natural gas (LNG) receiving terminal Sinopec wanted to build in Wenzhou that was likely to cost 8.83 billion yuan (USD 1.4 billion), the China Chemical Industry News said, without giving details.

PetroChina Kunlun Gas Co, a PetroChina unit that specialises in the downstream natural gas business, will build a compressed LNG facility and small-scale LNG facilities in Quzhou with 500 million yuan.
Sinopec would also focus on development of a 7,373 km gas pipeline between Xinjiang and Zhejiang with a capacity of 30 billion cubic metres per year, the papers reported.

mrcplast.com

(ICIS) -- While the European styrenics market still faces some obstacles, a swathe of new derivative capacities starting up in 2012 and a robust expandable polystyrene (EPS) sector are keeping players optimistic about the new year. ⌠There is a lot of concern about the volatility of the wider economy of course, said one trader back in October. ⌠But at times it's as if people can't see the forest for the trees. We are going to see a much tighter European market next year.

Speaking at November's European Aromatics & Derivatives Conference at Amsterdam in the Netherlands, Martin Pugh - president Europe, the Middle East and Africa at Frankfurt-headquartered producer Styrolution - said styrene is undergoing a significant shift, with demand growth likely to overtake capacity additions in the next three years. This, he said, will lead to operating rates gradually returning to around 90%, from the 80% level seen since the end of 2008 as a result of the economic downturn.

And the start-up of these new polystyrene (PS) and EPS ventures in 2012 will in all likelihood prove to be a double-edged sword for the European market. Certainly, the increased output of PS from the export-driven Middle East will make next year challenging for domestic suppliers.

The emergence of a single European barge contract number seen ahead of the December settlement is also likely to be a key topic in 2012, with many players unsure of how the various parties will manage to reach a consensus each month. Many players are also carefully watching Styrolution and how its role in the market will unfold in the new year.

With 17 production plants in 10 countries, Styrolution is now the global leader in the production of styrene monomer (SM), PS and styrene-based copolymers, and number two in acrylonitrile-butadiene-styrene (ABS), chief executive Roberto Gualdoni said on the sidelines of the 45th European Petrochemical Association (EPCA) earlier this year.

The state of derivative markets fluctuates from sector to sector, with PS players somewhat concerned about 2012 because of the cheap imports expected to hit Europe from the Middle East.
The PS market, which has struggled with oversupply despite a 25% capacity reduction over the past five to six years, is forecast to grow by only 3%, while other derivative markets such as EPS and ABS may expect to see growth rates of up to 5-6% from now until 2014.

Among downstream sources, there looks set to be a cautious start to 2012, with ABS players concerned over the state of eurozone economies and the viability of the euro as a stable currency.
Buyers have been destocking and purchasing the minimum necessary throughout the fourth quarter of 2011, as the risk of recession and debt contagion filter through Europe, and several sources worry that this pessimism may continue into next year.

MRC

(ICIS) -- China's SP Chemical has restarted its 150,000 dry metric tonne/year (dmt/year) chlor-alkali line at Taixing in Jiangsu province on 27 December following a month-long maintenance shutdown, a company source said on Tuesday.
SP Chemical also operates a 600,000 dmt/year chlor-alkali line at Taixing.
⌠The total 750,000 dmt/year chlor-alkali project will be operated at full rate after the 150,000 dmt/year chlor-alkali line restart, the source said.

The restart of the 150,000 dmt/year line has bolstered local buyers' sentiment, with the domestic price of 32% ion-exchange membrane caustic soda falling by 10% week on week to yuan (CNY) 2,656/dmt (USD420/dmt) on 26 December, according to Chemease, an ICIS service in China.
Major chlor-alkali producers in east China include Shanghai Chlor-Alkali Chemical (Shanghai CA), Zhejiang Juhua, Jiangsu Meilan, Suzhou Fine, Jiangsu Leeman, and Yangnong Chemical.

MRC