US BD prices to rise long-term on shift to ethane cracking

03 August 2012 18:03  [Source: ICIS news]

HOUSTON (ICIS)--US butadiene (BD) prices will rise in the long term as a result of the shift to light cracking based on cost-advantaged ethane from shale gas, the chief executive of TPC Group said on Friday.

“While the long-term trend is for pricing to move up, butadiene can also exhibit short-term volatility as we've seen over the past several years,” said Michael McDonald, CEO of TPC Group.

For example, McDonald said BD prices increased 49% in the first quarter, then fell 26% and another 16% between June and July.

“These trends will continue until on-purpose production becomes a significant factor in supply,” he said. “Currently BD supply is driven by ethylene plant operating rates and the composition of feed slates. Demand is driven by end-use demand for synthetic rubber, nylon and other products that require [BD]. [BD] is also difficult and expensive to store, exacerbating short-term supply/demand imbalances and resulting in price swings.”

By: Bobbie Clark
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