US BD spot prices drop on weaker demand, supply build

13 November 2009 22:07  [Source: ICIS news]

HOUSTON (ICIS news)--US butadiene (BD) spot prices were on a downward trend in November, pressured by weakened demand and increased supply, market sources said on Friday.

BD spot prices were assessed at 63-64 cents/lb ($1,389-1,411/tonne, €931-945/tonne) this week, down from 72-74 cents/lb early in the month, according to global chemical market intelligence service ICIS pricing.

The drop follows a flat BD settlement for November at 68 cents/lb, which stymied a surge in May-October, during which contracts rose by more than 170%.

The rollover this month came as BD supply began to loosen in October due to a slowdown in demand and a small increase in production.

US BD production in the third quarter was 772m lb (350,00 tonnes), up by 1.05% compared with 764m lb in the previous three months, according to the latest data from the National Petrochemical & Refiners Association (NPRA).

BD inventories in July-September were at 201m lb, which is up by 67.5% from 120m lb in April-June based on NPRA figures.

Inventories may show additional gains in the fourth quarter, as BD demand for December is also showing signs of softness, according to a producer.

Sentiment among buyers also pointed to supply on the looser side through the end of the year.

“I expect to have firm spot quotes in this range [63-64 cents/lb] for December,” a consumer said.

BD demand also seems to be tapering off in other markets.

Spot prices in Europe this week were at assessed at $1,350-1,430/tonne FOB (free on board) Rotterdam, down from $1,400-1,450/tonne a week before.

BD prices in Asia fell to $1,320-1,370/tonne CFR (cost and freight) northeast Asia, from $1,350-1,390/tonne a week earlier, pressured by ongoing weakness in downstream markets.

BD is a raw material used in the production of a variety of synthetic rubbers and polymer resins as well as a few chemical intermediates.

The largest single market for BD is the production of styrene butadiene rubber (SBR), which is mainly used to make automobile tyres.

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