NPRA ’11: US BD surge risks shutdowns downstream

28 March 2011 01:14  [Source: ICIS news]

SAN ANTONIO, Texas (ICIS)--The surge in US butadiene (BD) prices is unsustainable in the long term and some US downstream capacity could be shut down if prices continue to rise, a market participant said on Sunday.

That downstream capacity could be relocated to other regions if BD becomes unaffordable, the source said on the sidelines of the International Petrochemical Conference (IPC) in San Antonio.

Some markets may find an alternative feedstock routes, but in products like styrene butadiene rubber (SBR) no feasible alternative exists to BD, the source said.

US BD contracts were nominated up by as much as 20% for April on the back of rising crude oil prices, tight supply and continued firm demand.

One producer nominated an increase of 21 cents/lb ($463/tonne, €329/tonne), while three other producers were seeking increases of 17 cents/lb.

The initiatives would place April contracts variously at $1.21/lb and $1.25/lb, in a split settlement. The March contract settled at $1.04/lb.

The April settlement could set a record for BD, pushing at least some contracts above the $1.22/lb mark set for October 2008.

The uptrend in the US BD market stems from limited availability of crude C4, which is produced through naphtha cracking.

The outlook for the US points to continued crude C4 tightness because US crackers are expected to continue to rely on ethane as their main feedstock.

Hosted by the National Petrochemical & Refiners Association (NPRA), the IPC opened on Sunday and closes on Tuesday.

($1 = €0.71)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: William Lemos
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