US BD contracts to jump 4 cents/lb in June

26 May 2009 17:05  [Source: ICIS news]

HOUSTON (ICIS news)--US butadiene (BD) contracts in June will climb by 4 cents/lb ($88/tonne, €63/tonne) to 31 cents/lb based on the last nomination put forward for the month, market sources said on Tuesday.

US BD contracts usually settle at the lowest price nominated by the four main producers.

Three of those producers last week proposed increases of 7, 6 and 5 cents/lb FOB (free on board) USG (US Gulf) , while the fourth producer stepped out late in the week with a 4 cent/lb increase.

US BD contracts settled at 27 cents/lb in May, up by 2 cents/lb from April, according to global chemical market intelligence service ICIS pricing.

US buyers sharply criticized the nominations for June - particularly those at the top of the range - saying the initiatives were excessive and likely to destroy demand downstream.

One styrene-butadiene-rubber (SBR) producer said it would consider taking in less feedstock BD in June, even if that meant paying a contractual fine.

The buyer said it would look for cheaper alternatives in the spot market or reduce its own production if need be.

According to sources, US BD producers cited a recent jump in crude C4 import values to justify their proposed increases.

Buyers contended that the increase in C4, from which BD is extracted, did not warrant a contract hike in the levels nominated last week, but rather an increase of only 2 cents/lb.

US BD buyers include Lanxess, Invista, Michelin, ISP and Negromex. BD producers include Texas Petrochemical (TPC), ExxonMobil, Equistar, Shell and Ineos.

($1 = €0.71)

For more on butadiene, visit ICIS chemical intelligence
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By: William Lemos
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