Asia shipping 20,000 mt of butadiene in March, mostly bound for US Gulf Coast

A third, rare cargo of spot butadiene is to sail in March from Asia to the US Gulf Coast, following disclosure last week of two other cargoes, to meet tight availability in the latter region, market sources say.

The Gaschem Juemme and Happy Bird have been fixed to carry 5,500-8,000 mt from South Korea, while the Adriatic Gas will lift 4,000-5,000 mt from Taiwan.

In other routes from Asia, the Norgas Petaluma will load 5,000 mt of spot butadiene in South Korea for transit to South Africa, they said, bringing the total amount of exports from Asia to about 20,000 mt.

While the South Korean-origin cargoes were sold on a fixed price of about $3,000/mt FOB Korea, the Taiwan-origin shipment was linked to the April US contract price for butadiene minus an alpha equivalent to FOB Taiwan.

The US CP for March was settled at 110 cents/lb ($2,425/mt) and the April CP is moving to a higher settlement as US spot prices have exceeded the March CP.

On March 3, US butadiene pricing stood at a near five-year high, at 132-133 cents/lb ($2,910-$2,932/mt) CIF USG.

Spot US butadiene was last assessed higher on May 18, 2012, when it was at 132.50-133.50 cents/lb CIF USG, S&P Global Platts data showed.

Assuming that the April CP will be settled at least at 132 cents/lb and deducting freight from Asia to the USG at about $300-$400/mt, then FOB Taiwan would be about $2,510-$2,610/mt, while cost to the USG buyers would be about $3,210-$3,310/mt CIF USG.

In Asia, several producers and traders said the US April butadiene contract price could hit 140 cents/lb.