Europe Q1 butanediol rises to €1,850-1,950/tonne on firm demand

01 February 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--First-quarter European butanediol (BDO) contract prices have settled at €1,850-1,950/tonne ($2,534-2,671/tonne), up €50-80/tonne from the previous quarter, supported by healthy demand in a finely balanced market, sources said on Tuesday.

The BDO contract price was settled on a free delivered (FD) northwest Europe (NWE) basis.

A buyer that had aimed for a rollover in prices said it concluded its contracts at increases of €80/tonne from the previous quarter.

A major producer said: “The price increase materialised in the range of €60-100/tonne.”

The increase from the previous quarter’s prices was supported by the steady level of demand globally.

Feedstock costs were causing concern for the industry. The price of methanol rose by €38/tonne in the first quarter, while the February propylene contract price was up by €35/tonne, a new record high for the second month in a row.

“The big price increase in propylene is concerning,” a BDO buyer said.

Expectations for demand in the first quarter and the rest of 2011 were positive.

As a result, producers said availability was likely to tighten and suggested prices could increase further.

“Demand continues to be strong. There is no sign of it slowing down,” a major producer said.

“The supply chain is still thin and there is no buffer. It is a finely balanced market,” it added.

Another major producer said: “Our outlook is that product is starting to become tighter, in spite of most plants running as planned. It’s mainly demand.”

“After [the Lunar New Year holiday in China], we are seeing signs that the prices will go up again, with more pressure on volumes and hence pricing, because inventories will start to fall and the pressure of [the cost of] raw materials will continue to erode margins,” the producer explained.

When converted to tetrahydrofuran (THF), BDO is used to produce polytetramethylene ether glycol (PTMEG), which is used mainly in the production of spandex fibres as well as thermoplastic polyurethanes (TPU) and copolyester ether.

THF is also used as a solvent in the manufacture of polyvinyl chloride (PVC), cements and coatings, and in precision magnetic tape.

($1 = €0.73)

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By: Helena Strathearn
+44 208 652 3214

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