29 August 2012 18:00 [Source: ICIS news]
(adds market comment throughout)
LONDON (ICIS)--The European butadiene (BD) monthly contract price (MCP) for September has settled down by €25/tonne from August at €1,550/tonne ($1,938/tonne), market players said on Wednesday.
The price was agreed initially by two producers and two buyers, all of which confirmed the settlement.
Two other buyers said they would follow the settlement, which was agreed on an FD (free delivered) NWE (northwest Europe) basis.
A third producer said it disagreed with the MCP result, describing it as “a raw deal for producers”. However, the producer said it would have little choice but to use the number, once it had been fully confirmed.
A fourth producer, which had originally targeted a three-digit price increase for September, said it was not happy with the settlement, and felt that the increased naphtha costs justified a higher BD contract price. Nevertheless, the source said it would abide by the settlement, as this was the way the market worked.
One of the participating buyers said that the weakening BD market in Asia and the US had been critical in determining the outcome of the European MCP negotiations.
Price ideas had started out a long way apart, with buyers seeking decreases and producers looking for increases.
Last week, several sources had suggested a rollover as a possible compromise.
Producers emphasised the detrimental effect on their margins of rising naphtha costs, while consumers noted the downward trend in the Asian market.
Asian spot BD prices fell by $50–100/tonne last week to a range of $1,850–1,950/tonne CFR (cost and freight) NE Asia. This was caused by poor performance in downstream synthetic rubber sectors, and the expected arrival of a large number of European parcels in September and October.
In the US, producers nominated decreases for the September contract price at 83, 85 and 90 cents/lb, down by 7, 5 and 6 cents/lb respectively. No agreement has yet been reached.
In Europe, recent production problems have now been resolved, and sources last week described bearish sentiment on the spot market.
Sellers reported buying interest from Asia at $1,500-1,600/tonne FOB (free on board) ARA (Amsterdam-Rotterdam-Antwerp), but said these price levels were too low, given deteriorating margins.
A buyer said it had concluded spot deals for domestic delivery at €1,575/tonne FD NWE, flat to the August contract price.
European spot prices were assessed on 24 August at $1,550–1,650/tonne FOB ARA and €1,550–1,615/tonne FD NWE Inland.
($1 = €0.80)
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