US BD maker undercuts rivals, offers 40 cent/lb June drop

25 May 2012 17:29  [Source: ICIS news]

A Lyondell Basell facilityHOUSTON (ICIS)--A US butadiene (BD) producer nominated a 40 cent/lb ($882/tonne, €706/tonne) drop for June, undercutting proposed reductions made by two rival suppliers in the past few days, market sources said on Friday.

The 40 cent decrease is a 27% reduction from $1.47/lb, the price that producer settled its contracts in May.

The nomination undercut a 24% drop proposed by another supplier, which on Monday offered a 35 cent/lb reduction from its $1.45/lb settlement in May, putting its June contract at $1.10/lb.

Most US BD contracts in May settled at $1.45-1.47/lb, dropping on average by 7.50 cents/lb from April.

The range includes the settlements of three US producers, which account for more than 80% of the US capacity involved in the monthly settlement process.

A small share of the US market settled at $1.55/lb in May based on the settlement of a fourth producer, which nominated $1.37/lb for June, a price that represents a nearly 12% reduction from its May contract.

The outcome of the June settlement in the US still depends on the nomination of a final supplier, which settled at $1.47/lb in May and is expected to unveil its June initiative before the end of the month.

The drop in US BD contracts in June is in line with a sharp reduction in other regions.

The European BD monthly contract price (MCP) for June settled on Friday at €1,850/tonne ($1.05/lb), down by €400/tonne from May on weak crude oil and naphtha prices and soft demand.

BD prices in Asia were assessed this week at $1,900-2,000/tonne CFR (cost and freight), down by around 50% from its 2012 peak of $3,800-4,000/tonne in mid-February.

The slump in Asia stems from ample supply and soft demand.

BD buyers in the region have cut back production, given the weak economic outlook and growing concerns over the eurozone debt crisis and a slower Chinese economy.

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

($1 = €0.80)

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By: William Lemos
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