US BD producer nominates 20 cent/lb drop for November

21 October 2011 21:07  [Source: ICIS news]

HOUSTON (ICIS)--A US butadiene (BD) producer nominated a 20 cent/lb ($441/tonne, €322/tonne) drop for November, paving the way for another large reduction for the US contract, market sources said on Friday.

According to sources, the producer in question split the US market in October with a settlement of $1.45/lb, adding that the proposed drop would put its contracts next month at $1.25/lb.

Market sources predicted the three other US producers, which settled at $1.40/lb in October, were likely to announce an even larger reduction for November, based a continued decline in global BD prices.

"It is unlikely that US producers want to have the most expensive BD in the world," a market source said, pointing to new drops in BD prices in other regions.

BD prices in Europe fell by another $100/tonne this week to $1,700–1,900/tonne FOB (free on board) ARA (Amsterdam, Rotterdam, Antwerp) on weak demand and anticipation that market conditions are unlikely to change until at least the first quarter of 2012.

In Asia, prices this week dropped by as much as $250/tonne from a week earlier, depending on the region, on ample supply and weak demand.

BD prices in northeast Asia and Taiwan fell to $2,200–2,250/tonne CFR (cost and freight), while prices in southeast Asia dropped to $2,300–2,350/tonne on weak market sentiment and a lack of buying interest.

Spot BD was offered in the US at $1.15/lb this week, but talk that a deal was done at that level could not be confirmed.

The offer did circulate in the market, one market participant confirmed, adding, however, that US buyers could likely shop for a better deal.

"If we were in the position to buy... maybe we could get a better price," the source said.

The outcome for the US contract in November will become clearer in the next few days as the three remaining producers that participate in the settlement process step out with their initiatives.

A reduction in November would be the third in as many months for the US contract. BD fell by 30 cents/lb in October, a drop that followed a 3.3% average reduction in September.

The drop in September snapped a nine-month uptrend in the US, during which BD contract prices more than doubled on tight supply and firm demand.

Major US BD producers include ExxonMobil, LyondellBasell, Shell and TPC Group. Buyers include Ashland, Invista, LANXESS, Michelin and Negromex.

For more on butadiene visit ICIS chemical intelligence


By: William Lemos
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