Most US BD contracts drop 16% to 90 cents/lb for July

29 June 2012 23:01  [Source: ICIS news]

HOUSTON (ICIS)--US butadiene (BD) prices will fall by 16% to 90 cents/lb ($1,984/tonne, €1,587/tonne) in July under settlements reached this week by three producers that account for more than 80% of the US capacity negotiated in the monthly contract.

Two of those producers had nominated a price of 90 cents/lb for next month, while a third producer, which had originally nominated 98 cents/lb, agreed to match the lower price.

All three suppliers had settled their June contracts at $1.07/lb.

A fourth supplier, which accounts for around 18% of US capacity and usually does not settle with the rest of the market, was heard to have dropped its July contracts to 98 cents/lb after initially nominating a price of $1.03/lb for next month.

Confirmation of that settlement was unavailable. The drop represents a 15% reduction from that producer's $1.15/lb price in June.

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

The drop in July is the third in as many months and puts US BD prices at their lowest level since January 2011.

US BD prices rose by 58% in January-April but fell by 7 cents/lb in May and slumped by 40 cents/lb in June as a result of a drop in global demand, particularly in Asia.

BD prices in Asia were assessed at $2,200-2,300/tonne this week, up from $1,900-1,950/tonne a week earlier, but down from a peak of $4,000/tonne in early February.

In Europe, the monthly BD contract for July settled this week at €1,500/tonne, falling by €350/tonne from June on soft demand, ample supply and a weaker upstream market.

The outlook for BD in the coming months remains uncertain, a source said, adding that trends in Asia would determine whether the US contract will bottom out in July.

BD producers in North America 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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