Europe Q3 BDO contract prices decrease on lower feedstocks

17 July 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--Third-quarter European butanediol (BDO) contract prices have decreased by €90–100/tonne from the previous quarter on lower feedstock costs, mediocre demand and adequate availability, sources said on Tuesday.

Contracts for the quarter were assessed at €2,100–2,150/tonne ($2,593–2,654/tonne) FD (free delivered) NWE northwest Europe).

A number of market participants were not content with the outcome.

“I’ve closed some deals at a reduction of €100–120/tonne,” said a buyer. “I’m not satisfied, though. Propylene [the July contract price] is down… People were expecting a greater relief in BDO prices.”

The source added that demand for derivatives of BDO, such as polybutylene terephthalate (PBT), is not healthy.

“We have had cases whereby a price drop of €90–100/tonne was needed. In some other cases the price drop was 'only' €60–80/tonne,” said a distributor.

A producer has settled most of its contracts at a reduction of €90–100/tonne, with larger accounts getting the greatest discounts.

These decreases were greater than was originally expected. On 26 June, the producer was hoping for a rollover, but expecting to decrease prices by around €30/tonne.

However, a week later, most market participants concluded that third-quarter price decreases would be more significant as a result of buyers’ expectations.

On 3 July, following the settlement of July contract prices for feedstocks propylene and methanol, the producer said: “Customer expectations have driven greater-than-expected decreases. Lower crude [oil], lower propylene [the July contract price], there’s internal pressure.”

Looking ahead to the second half of the year, the producer said that it is expected to be similar to the first half. Demand may be slightly lower, but still reasonable.

This suggests that any further prices decreases should not be significant, said the producer.

($1 = €0.81)


By: Jo Pitches
+44 208 652 3214



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