US BD contracts for June fall 27%, erase most 2012 gains

31 May 2012 22:53  [Source: ICIS news]

HOUSTON (ICIS)--US butadiene (BD) contracts will fall by up to 27% in June, market sources said on Thursday, confirming settlements that have erased nearly all of the gains in US prices since the start of the year.

According to sources, most US contracts for June fell to $1.07/lb ($2,359/tonne, €1,911/tonne) based on the settlements of three US producers, which account for around 80% of US capacity.

The three suppliers in May settled their contracts at $1.45-1.47/lb.

One of those suppliers had orginally nominated a contract of $1.10/lb for June, but later agreed to meet the $1.07/lb price nominated by the other two producers, sources said. 

A small share of the US market will have a price of $1.15/lb in June based on the settlement of a fourth producer, whose contracts do not include discounts or premiums.

That supplier, which in May settled $1.55/lb, had originally nominated a June price of $1.37/lb.

The drop in US BD prices in June is the second in as many months.

The reduction, which stems from weak demand and sharply lower BD prices in Europe and Asia, pushed US contracts back to the levels of January 2012, when the same three producers settled at $1.05/lb and the fourth supplier at $1.12/lb.

The outlook for July is unclear, a market source said, adding that US contracts may weaken further if prices in other regions remain on a downtrend.

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

($1 = €0.81)

For more on butadiene visit ICIS chemical intelligence
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By: William Lemos
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