US BD producer nominates up 2 cts for Sep, others see flat

20 August 2010 21:16  [Source: ICIS news]

BD producer nominates increaseHOUSTON (ICIS)--A US butadiene (BD) producer on Friday nominated an increase of 2.00 cents/lb ($44/tonne, €34/tonne) for September, but sources this week predicted contracts were likely to roll over or drop amid looser supply in other regions.

US BD contracts in August settled at 94.00 cents/lb, unchanged from July.

“We are expecting a drop in BD prices since Asian prices are very low at this point in comparison to the US price. Worst case scenario will be to have a rollover,” a styrene butadiene rubber (SBR) producer said.

BD prices in Asia, a key supplier of BD to the US, have dropped by around 10% in the past four weeks, pressured by weak buying interest and ample supply.

BD in northeast Asia was assessed this week at $1,600-1,620/tonne CFR NE Asia (cost and freight Northeast Asia), down from an average of $1,800/tonne around mid-July.

One market participant also pointed to a softening in Europe, where BD prices have dropped by 7% in recent weeks amid weaker export demand and improved supply.

“Not a lot of factors supporting an increase so rollover may be best case,” the source said, referring to the US contract.

Spot prices in Europe were assessed this week at $1,870-1,940/tonne FOB Rdam (free on board Rotterdam), down from $2,000-2,100/tonne in the week ended 23 July.

Market participants have also pointed to spot prices in the US, saying a parity between spot and contract material was indicative of steady pricing moving forward.

BD spot prices in the US were assessed this week at 92-96 cents/lb, unchanged from a week earlier, but down from 95.00-97.00 cents/lb four weeks ago.

The outcome of the September BD settlement in the US will depend on nominations from three other suppliers, which are expected to step out with their initiatives in the coming days.

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

Two of those producers are on allocation at 85% but buyers said supply from other sources, mostly imports, was filling the gap in the market.

BD contracts in the US rose by 49% in the first half of 2010 until a flat settlement in July capped the uptrend. The increase was due to tight supply and firm demand for the product.

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

($1 = €0.78)

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By: William Lemos
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