11 November 2011 20:13 [Source: ICIS news]
HOUSTON (ICIS)--US butadiene prices should rebound in 2012 after falling sharply since the last of the third quarter, TPC Group CEO Mike McDonnell said on Friday.
However, destocking will continue through the rest of 2011, as companies push for a minimal amount of inventory for the end of the year, McDonnell said during the company's third quarter earnings conference call.
McDonnell said it is doubtful that the soft market and low prices will be an issue a few months into 2012.
Many of TPC’s customers have indicated a more optimistic outlook for 2012. For example, two tyre manufacturers have planned significant building or expansion plans because they forecast an increased demand for tyres, McDonnell said.
BD is a key component in styrene butadiene rubber, which is used to manufacture tyres.
He also said when BD prices fell in 2009 to 45 cents/lb ($992/tonne, €734/tonne), it rebounded to an average price of 84 cents/lb in 2010. He believes a rebound is in the future for BD again in 2012.
Additionally, there are five ethylene crackers with a planned maintenance turnaround in the first and second quarters of 2012 that will reduce supply on a temporary basis and should drive up the cost of BD, McDonnell said.
McDonnell said he does not believe BD consumers will get caught short of material with the pending shutdowns.
While BD prices fell significantly during the end of the third quarter, TPC Group had a positive price timing impact of $15m.
BD contract prices went from an average of $1.38/lb in the second quarter to and average of $1.73/lb in the third quarter, according to ICIS pricing. However, during the third quarter the market softened, and the price for BD headed down.
($1 = €0.74)
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