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Buying enquiries from Europe for Asian petrochemicals have risen in recent weeks as international sanctions hit supply from Russia amid the Ukraine war.
In the styrene-butadiene-rubber (SBR) market, Asian producers are preparing to ship out more cargoes to Europe given recent loss of Russian supply.
Tyre factories in Europe are a major consumer of Russian SBR, and “quite a number of them have had to look for alternative supplies now, after the sanctions on Russia came into force”, a northeast Asian SBR maker said.
In 2021, Russia exported more than 100,000 tonnes of SBR to Europe, according to the ICIS Supply and Demand Database.
Increased demand from Europe helped buoy up spot prices in Asia despite lacklustre demand in this region, with offtakes in southeast Asia and China tapering off.
Russia itself is also looking at the Asian market for some petrochemicals given lost access to supply from neighbouring European countries.
For polystyrene (PS), there were several enquiries from Russia for northeast Asian cargoes, also amid an overall supply tightness in south Asia owing to feedstock-related logistical issues.
India presents a viable alternative PS source for Russia given its proximity compared with the rest of Asia, but the south Asian country is in short supply of the material.
Discussions were ongoing for April, with sellers still mulling over payment terms denominated in US dollars.
In the caustic soda market, European buyers along the Mediterranean are looking for cargoes in northeast Asia to replace Russian supplies. They recently bought volumes from China and South Korea.
Russian material, on the other hand, is unlikely to find buyers in India and China as the two countries are in net surplus of caustic soda.
For caprolactam (capro), Asian market players noted an unusual number of new queries and bids from European buyers, citing prohibitively high shipping rates to get Russian supplies.
Some buyers in Asia have been procuring cargoes from deep-sea sources, including Russia, but this channel has just virtually closed amid the sanctions on Moscow.
Self-sanctioning by industries looking to distance themselves or cut ties with Russia have also weighed heavily on commodity and downstream markets.
Spot chemical prices in northwest Europe have risen in tandem with soaring feedstock costs and tightening supply, with the region’s ICIS Petrochemical Index (IPEX) on 1 April up 5.3% week on week.
A slew of sanctions were imposed by western nations against Russia following its invasion of Ukraine on 24 February.
These include Russia’s exclusion from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) global payments system, as well as the suspension of its banks operations abroad while shipping companies are being deterred from calling on Russian ports.
