07 September 2012 15:40 [Source: ICB]
Many producers had shut down production as a precaution ahead of Hurricane Isaac's arrival
North American butanediol (BDO) market participants have kept an eye on recent developments in the US Gulf following Hurricane Isaac's impact on production in the region.
Hurricane Isaac prompted widespread disruption in Louisiana
Copyright: Rex Features
BDO producer BASF was one such company that shuttered production ahead of the hurricane.
The company shut down production at its Geismar complex in Louisiana, including a 135,000 tonne/year BDO unit. BASF confirmed that it is working to start up operations at the Geismar facility.
BASF's unplanned shutdown of the Geismar facility came ahead of another North American supplier's planned four-week maintenance turnaround in September.
Plus, BASF has already said it will shut its acetylene and BDO plants in Germany for six weeks of planned maintenance and modernisation at the end of August.
BASF had already taken down the Geismar for about 30 days in the first quarter as part of a complex-wide turnaround.
BDO trade sources have said reduced capacity during a seasonal slowdown would basically ensure that inventory is not being built and prices may not move lower as a result.
One supplier also said if demand picks up there could be a short-term shortage and pricing could move higher.
Trade sources said the planned September turnaround in North America should come back on line as expected, but that any delays or issues could influence the market further.
The same can be said for BASF's planned start-up in Geismar should start-up of BDO production take longer than expected.
Third-quarter North American BDO contracts have recently settled at a decline of 5.50 cents/lb ($121/tonne, €97/tonne) back in July, but trade participants have said it remains too early to discuss fourth-quarter BDO contracts.
Buyer reaction to the upcoming turnaround in September and BASF's decision to shut its Geismar facility has been thin, with most taking a wait-and-see approach to the market.
BDO consumers have not reported any issues in sourcing supply, and no producers have reported any problems in fulfilling contractual obligations, especially in light of Isaac. Ashland and LyondellBasell also produce BDO in North America.
Overall, global trade BDO trade participants are still focused on China, which is a key driver of the global market.
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