FocusUS BD prices in June poised for new drop on global softness

17 May 2012 22:27  [Source: ICIS news]

By William Lemos

HOUSTON (ICIS)--US butadiene (BD) contract prices are poised for another decline in June, market sources predicted this week, citing continued softness in spot prices in other regions, particularly Asia.

One market participant predicted the US contract, which fell by around 5% in May, could shave off a nickel in June, while another source said a double-digit drop was also possible.

Most US BD contracts in May settled at $1.45-1.47/lb ($3,197-3,241/tonne, €2,526-2,560/tonne) FOB (free on board), down on average by 7.50 cents/lb from April.

The drop in the May settlement, which was the first in 2012, came as BD market conditions have weakened on a global scale, after prices soared in the first four months of the year.

The US contract for the first four months of this year rose by nearly 60% compared with December 2011, when BD settled at 98 cents/lb.

The US contract would fall again in June as international prices remain on a sharp downtrend, a source said, citing a 35% slump in the Asian market in the past few weeks.

BD spot prices in Southeast Asia dropped to $2,200-2,250/tonne CFR (cost and freight) last week, while prices in Northeast Asia were assessed at $2,250- 2,300/tonne, down from $3,450/tonne four weeks earlier.

The downtrend in Asia stems from on ample supply and weak demand, as several styrene butadiene rubber (SBR) and acrylonitrile butadiene styrene (ABS) producers in the region have shut down for maintenance or cut back production, given the uncertain global market outlook.

US demand in the key SBR market has also slowed, a source said, adding that US buyers are mostly on the sidelines waiting for prices to drop further in the weeks ahead.

US BD spot prices were assessed last week at $1.20-1.30/lb CIF (cost, insurance and freight), down from $1.50-1.60/lb four weeks earlier.

US BD contracts usually settle at the end of the month for the following calendar month.

Nominations for the June contract are expected to be unveiled next week.

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By: William Lemos
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