02 March 2010 17:40 [Source: ICIS news]
HOUSTON (ICIS news)--Two US butanediol (BDO) producers have announced second-quarter price increases of 10 cents/lb ($220/tonne, €163/tonne) as strong demand squeezes already tight supply, the sellers said on Tuesday.
"I think it was necessary given the supply/demand situation and raw materials," a producer said. "Inventories are completely drained right now. Supply and demand is out of balance."
Buyers whittled down inventories before the end of 2009 and slowly started to restock in the new year, but have been rushing for material lately as demand, particularly in the polybutylene terephthalate (PBT) sector, has started to ramp up, the producer explained.
BDO customers in some cases are requesting three-day lead times for orders when seven or more days is customary, showing how shallow buyer inventories are, the producer said.
"We are running assets at 100% and we can't keep up," the producer said.
A second seller said strong demand coupled with higher raw materials costs also prompted the increases.
However, it is too soon to proclaim a recovery in the market because the uptick in demand could be simply a combination of restocking and a short-term bump in industrial output, specifically in automotive, the producer explained.
One of the producers also announced a 14 cent/lb increase on its version of polytetramethylene ether glycol (PTMEG), which is a BDO derivative.
Calls to other buyer and seller sources were not returned.
($1 = €0.74)
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