Europe butadiene, CC4 spot falls sharply on lengthening market

02 September 2011 12:19  [Source: ICIS news]

Demand for C4s fallingLONDON (ICIS)--European butadiene (BD) and crude C4 (CC4) spot prices have registered sharp decreases over the past week as availability in the market lengthens while demand slows further, players said on Friday.

Domestic inland BD spot prices slid by €50-75/tonne ($71-107/tonne) to trade at €2,350-2,400/tonne FD (free delivered) NWE (northwest Europe), while export values also lost a further $50/tonne, leaving prices at $3,500-3,550/tonne FOB (free on board) according to data from ICIS. 

The CC4 spot factor also slipped to 1.45-1.48 times naphtha from the 1.65 recorded just three weeks ago.

Many players said that the length in the market had initially appeared over the traditionally slower summer holiday season, as although demand had dwindled, cracker margins remained strong making producers reluctant to cut back operating rates.

This was evident in the BD monthly contract price (MCP) settlement for September, when prices saw a reduction of €125/tonne to leave values at €2,400/tonne FD NWE – the first decrease since the year began.

The additional length now threatens to weigh heavily on the market in September, as buying interest shows no signs of firming sufficiently to absorb the additional quantity in the market yet.

This has been exacerbated by a loss of confidence from both US and Asian buyers, according to one trader, who conceded that it was becoming increasingly difficult to place volume in either the domestic or export market.

“The spark of interest [for BD] that we saw from Asia in the previous weeks has now dimmed entirely and all these economic woes mean that US buyers are cautious,” the trader outlined, adding: “It is not clear whether the slowdown in demand is due to the summer holidays or whether it is fundamental, but the signs do not look good.”

A second BD seller reiterated this outlook, explaining: “Suppliers are adjusting their expectations for demand to lower levels for the rest of the year.”

Despite the lower prices, consumers remain reluctant to purchase either BD or CC4.

One BD buyer said: “The BD contract price is still the third highest on record – the only thing shocking about the reduction to me was how much margin the producers are still making.” 

A CC4 consumer echoed similar sentiments, commenting that prices are still too high for buyers to shoulder.

($1 = €0.70)

For more on crude C4 or BD, visit ICIS chemical intelligence

By: Stephanie Wilson
+44 20 8652 3214

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