Traders eye Chinese butadiene after explosion in Korea
Traders are exploring possibilities of exporting Chinese butadiene (BD) to South Korea after an explosion at Lotte Chemical's Daesan cracker on 4 March crippled a 150,000 t/yr extraction unit and forced an indefinite force majeure declaration. The accident injured at least 31 people.
A BD consumer based in South Korea was forced to seek prompt second-half March supplies from Malaysia after Lotte declared force majeure. Freight rates between Malaysia and south Korea are currently hovering around $90/t while shipping costs between east China and South Korea are nearly half at around $50/t. Freight rates between Dalian, where Hengli's new 140,000 t/yr BD extraction unit is located, and South Korea would be even lower.
China's production of BD has risen over the past few months with the start-ups of both Hengli Petrochemical and Zhejiang Petrochemical's 200,000 t/yr plant on Zhoushan island. Prospects of Chinese BD exports are also now higher as the government started to provide a full 13pc refund on value added tax (VAT) from March 2019. There was previously a 3pc difference in VAT paid and refunds, which prevented substantial BD exports.
South Korea-based BD consumers have also started to receive offers for prompt BD from Chinese shore tank inventories in the high-$800s/t cfr Korea but had deemed these offers too high. Domestic Chinese BD prices are also under pressure as downstream operating rates remain low as a result of the coronavirus outbreak. Delivered prices are hovering around 6,400 yuan/t or around $794/t on an import parity basis after accounting for 2pc import tax and 13pc VAT.
But exports from these two green-field producers may not start immediately. Hengli Petrochemical has yet to stabilise the water content of its BD cargoes and this may not be able to meet specification requirements of Korean consumers, but this issue is expected to resolve itself over time. Zhejiang Petrochemical has already reached on-specification production from its plant but its export terminal will only be put into operations in May.
By Bohan Loh
source: Argus Media
Top News
Six last month
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Gold price faces worst week since 2021 as Fed signals no rate-cut rush
Iron ore price flirts with key $100/t level on firm demand, China stimulus hopes
Gold loses some luster after Trump’s decisive win
Hedge funds slash bullish wagers on gold over Trump election win
Resolute Mining says it will pay Mali $160 million in tax dispute
Families gather at South African mine shaft where hundreds are feared stuck underground
Russia takes aim at US nuclear power by throttling uranium
Earth AI, Legacy Minerals make first greenfield palladium discovery using artificial intelligence
Mexico’s proposed higher mining royalties could block nearly $7bn in investments
Sierra Leone woos miners to clean energy with $11 billion plan
Alrosa plans production cuts and staff reduction for 2025
Chile’s rare salt flat fish face threat from lithium mining project
Endeavour Silver raises $73m for Pitarrilla project
BHP to spend up to $14 billion on Chilean copper expansion
Chile’s rare salt flat fish faces threat from lithium mining project
British Columbia creates new mining ministry to tackle critical minerals amid doubts over capacity
China’s germanium, gallium ban could cost the US $3.4 billion
Iran Alloy Steel Company intends to purchase 12 tons of ferrotungsten through public tender
Iran Alloy Steel Company intends to purchase 150 tons of Low-Carbon Ferro Manganese through public tender
Earth AI, Legacy Minerals make first greenfield palladium discovery using artificial intelligence
Mexico’s proposed higher mining royalties could block nearly $7bn in investments
Sierra Leone woos miners to clean energy with $11 billion plan
Alrosa plans production cuts and staff reduction for 2025
Chile’s rare salt flat fish face threat from lithium mining project
Endeavour Silver raises $73m for Pitarrilla project
Chile’s rare salt flat fish faces threat from lithium mining project