Two US BDO producers call force majeure as market tightens

15 June 2010 23:02  [Source: ICIS news]

HOUSTON (ICIS news)--Two of the three major US butanediol (BDO) producers have declared force majeure (FM) on their domestic units in the past four days, sources said on Tuesday, exacerbating an already tight market.

On 11 June, BASF announced a power outage that damaged the catalyst at its Geismar BDO production plant in Louisiana.

"These measures will significantly limit BASF Corporation's ability to continue to satisfy the significant demand BDO and derivatives that has persisted since the beginning of the year," the company wrote in a letter sent to sources.

BASF did not provide a timeline as to when they would emerge from the FM, but said that it only pertained to its North American facility. A call to BASF was not returned.

Three days later, on 14 June, LyondellBasell informed it customers that an "unplanned production disruption" had shut its BDO unit at Channelview, Texas, on 11 June.

In response to the shutdown, Lyondell told buyers that monthly allocations for BDO and derivative tetrahydrofuran (THF) would not exceed 40%, based on historical sales.

A call to LyondellBasell went unreturned.

The volume restriction from Lyondell was described by one source in the market as "massive" due to severe tightness in the market before the FM announcements.

The supply situation had BDO producers announcing third-quarter price hikes of 14-15 cents/lb ($309/tonne, €253/tonne) and one producer abandoning quarterly pricing for a monthly structure.

The increases would in all likelihood pass with ease after the news from BASF and Lyondell, sources said.

The news had market players saying it would likely be at least next year before supply would loosen.

Major US butanediol (BDO) suppliers include BASF, Invista, International Specialty Products (ISP) and LyondellBasell.

($1 = €0.82)

For more on butanediol (BDO) visit ICIS chemical intelligence
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By: Ryan Hickman
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