US TPC sees secure C4 supply for BD despite light feed trend

04 March 2011 16:39  [Source: ICIS news]

HOUSTON (ICIS)--TPC Group remains confident in its ability to secure supplies of crude C4 despite the trend of olefins plants cracking more ethane, the US butadiene (BD) producer said on Friday.

“Lighter cracking continues to drive a tight market for crude C4,” TPC chief executive Charlie Shaver said on an earnings conference call.

“But we’re still pleased with our mix of crude C4 suppliers and are still confident that we can secure supply,” he added.

Shaver said TPC was active on the import market as well.

Crude C4, from which BD is extracted, is produced during the naphtha cracking process. As such, the continued trend in the US toward cracking ethane instead of naphtha limits crude C4 supply.

But because of its supply arrangements, TPC was benefiting from the surge in selling prices for butadiene (BD) without being squeezed on supply, Shaver said.

US BD contracts have increased for four consecutive months, with the $1.04/lb ($2,293/tonne, €1,651/tonne) March settlement representing a level the BD market had not seen since late 2008, Shaver said.

Global factors such as tyre plant expansions, economic recovery, rising crude prices and ethylene turnarounds in Asia were also providing upward pressure on the BD market, he noted.

As such, Shaver expects balanced-to-tight BD supplies for the remainder of 2011, he said.

“The fundamentals remain very good for companies such as TPC and our suppliers,” he said.

“Our market position allows us the ability to serve our customers globally and secure the feedstocks we need to operate,” he said.

The company said that many of its customers had announced programmes to re-invest capital, and as such, TPC is running its plants at high utilisation rates and reviewing options to de-bottleneck certain units.

TPC expects its adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to rise to $24m-28m in its fiscal first quarter ending 31 March, up from $19m in the final quarter of 2010.

TPC’s stock traded at $30.98/share in mid-morning trading on the New York Stock Exchange, down $1.04, or 3.3%, for the day.

($1 = €0.72)

For more on BD visit ICIS chemical intelligence

By: Ben DuBose
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