Tyre makers start Q4 BR contracts early on fears of BD surge
21 August 2009 05:00 [Source: ICIS news]
SINGAPORE (ICIS news)--Tyre makers in Asia have taken the initiative to start the fourth-quarter (Q4) butadiene rubber (BR) contract negotiations, much earlier than usual in light of the relentless feedstock butadiene (BD) price surge, BR producers said on Friday.
BR is a raw material used in the manufacture of tyres.
Although Q4 contract discussions usually start in September, some tyre makers have already indicated their interest to commence the Q4 BR discussions amid fears that the BD price might rise further and consequently push the Q4 BR contract offers higher.
However, BR producers said it was still too early to initiate Q4 contract discussions, given that the feedstock BD price might continue to spike further.
The BD spot price has surged above $1,500/tonne (€1,050/tonne) CFR (cost and freight) northeast (NE) Asia, more than double since early June when prices hovered around $700/tonne CFR northeast (NE) Asia, according to global chemicals markets intelligence service, ICIS pricing.
BR producers have made an initial hefty 50% price hike to $2,200-2,300/tonne CFR Asia for the Q4 contracts but said this would be revised further, depending on the feedstock BD price.
A spread of $700-800/tonne is required for BR producers.
“We are closely monitoring the feedstock BD situation and if BD prices continue to spike further, we will revise our offers upwards,” a BR producer said
Third quarter BR contracts were settled mostly at $1,400-1,500/tonne CFR Asia, depending on the time they were concluded, cargo size and terms and conditions.
($1 = €0.70)
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By: Helen Yan
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