January butadiene contracts set to fall 1 cent/lb

04 January 2006 20:06  [Source: ICIS news]

HOUSTON (ICIS news)--January US butadiene (BD) contracts were set to fall 1 cent/pound ($22 or Euro18.63/tonne) on soft fundamentals, market sources said on Wednesday.

Market sources said two suppliers initially announced a rollover for January contracts. However, strong buyer opposition, coupled with lower spot BD prices, compelled two other BD manufacturers to nominate a 1 cent/pound price cut for January contracts, sources said.

With BD spot prices in the mid-40s cents/pound free on board (FOB) US Gulf (USG) on sluggish basics, buyers pressed for a bigger January price cut. A few customers also pressed for a larger January decrease on concerns that the differential between BD prices in the US and Europe would continue to grow. A price drop-off was expected for the BD European contract, market sources said. 

Fourth quarter contract prices were 44 cents/pound free delivered (FD) in northwest Europe (NWE).  BD spot prices in Europe were in the low-to-mid 30s cents/pound FOB Rotterdam (RDAM) in late December. Market players were tracking the European contract market for an indication on price ideas. 

Market participants said that the lowest nomination usually becomes the market price. Insiders expected that the producers who proposed the rollover would withdraw their nominations to the 1 cent/pound decline.

If fully settled at a 1 cent/pound price cut, January contract prices would fall to 49 cents/pound free on board (FOB) US Gulf (USG). December BD contract prices were 50 cents/pound FOB USG. US BD players said consumption would improve in the first quarter after a slow fourth quarter with an anticipated upturn in downstream production.

By: Dayna Owens
+1 713 525 2653

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