US BD makers seek 7 cent/lb May hike, buyers see smaller increase

22 April 2010 17:48  [Source: ICIS news]

HOUSTON (ICIS news)--Two US butadiene (BD) producers nominated May contract increases of 7 cents/lb ($154/tonne, €115/tonne), but buyers on Thursday predicted a smaller increase as a result of looser BD supply.

US BD contracts in April settled at 84 cents/lb, up by 8 cents/lb from March, according to global chemical market intelligence service ICIS pricing.

“We are expecting an increase of around 5 cents/lb in May,” a consumer said, citing a steady inflow of BD cargoes into North America from Asia, Europe and Brazil.

Imports from Asia alone would likely total 30,000 tonnes between April and June, the source said, adding that incremental parcels from Brazil and Europe were also helping take pressure off US supply.

“US consumers have been more proactive in securing BD,” another source said, referring to the imported cargoes.

The source also pointed to the May settlement of the monthly European BD contract, saying a 5 cent/lb increase in the US would be in line with prices in Europe, including freight.

The European contract was agreed on Wednesday at €1,350/tonne ($1,800/tonne), flat with April on a FD (free delivered) NWE (northwest Europe) basis. Freight from Europe to the US is at around $200/tonne, which would put the product in the US at just over 90 cents/lb.

However, BD spot prices in Asia have strengthened in the last four weeks, a factor that could help US producers make their case for higher prices, particularly since most of the BD imported by the US was sourced in that region.

BD prices in Asia were assessed at $2,040-2,100/tonne CFR (cost and freight) NE Asia in the week ended 16 April, up from $2,000-2,050/tonne a week earlier. Freight from Asia to the US Gulf was estimated at $300/tonne, putting the product at $1.06/lb USG (US Gulf) delivered.

BD spot prices in the US were assessed at $1.04-1.06 cents/lb last week, in line with prices in Asia.

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

The remaining two suppliers were expected to step out with their initiatives by Friday.

US BD producers include ExxonMobil, INEOS, LyondellBasell, Shell and TPC Group. Buyers include Invista, International Specialty Products (ISP), Lanxess, Michelin and Negromex.

($1 = €0.75)

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