03 March 2010 17:19 [Source: ICIS news]
By Barbara Ortner
BRUSSELS (ICIS news)--Major players in the European butadiene contract market are open to moving away from the current quarterly system, it emerged during an industry panel debate on Wednesday.
“Monthly negotiation can be done. We just don’t want the nomination system, because in the ?xml:namespace>
“We want to keep the negotiation element as in the quarterly,” Blaauw said, speaking at the 5th ICIS World Olefins Conference.
“We cannot change the price of a tyre every month. If the price (of butadiene) goes up, we take risk because we can’t pass it on, and we lose money,” he added.
Blaauw outlined another option: “Another alternative could be a formula-based butadiene contract price, for example linked to naphtha, but that would mean we wouldn’t discuss any more.”
Major producers on the panel agreed that it was important to keep the negotiating element in the mechanism for settling European butadiene contract prices.
Craig Barry, business director co-monomers and global C4s at Dow, noted that it was important for the consumer to have a say, but that producers would not be interested in taking on additional investment.
“Butadiene is never going to be the driver for ethylene producers - it’s a co-product,” he said.
For an ethylene producer to get interested in butadiene, it would have to show solid returns over the long term. Since the product was strategic for the consumers, they would have to drive the investment, he said.
John Medico, director crude C4 and butadiene of TPC Group (formerly Texas Petrochemical Company), said that the combination of European quarterly, US monthly and Asian spot markets created a lot of arbitrage opportunities.
In contrast, David Cartwright, market manager C4 olefins at INEOS Olefins & Polymers was in favour of a monthly contract price.
“Consumers say they want European extraction capacity filled. The only way to do it is to have a more responsive pricing mechanism, so that European business can compete for the marginal tonnes of butadiene, which are coming out of the Med - Ras Lanuf and Aliaga - and going east and west away from
“Those volumes would stay in
The 5th ICIS World Olefins Conference takes place in
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