US Dec BD settles down 7 cents/lb after mixed nominations

30 November 2012 23:03  [Source: ICIS news]

US Dec BD settles down 7 cents/lbHOUSTON (ICIS)--US butadiene (BD) December contracts all settled at a reduction of 7 cents/lb ($154/tonne, €119/tonne), sources said on Friday, after initial nominations were proposed at several different rates.

The decline will bring December BD contracts to 76 cents/lb for customers of the three producers who account for 82% of US BD production capacity.

For customers of the fourth producer, the 7-cent/lb decline will bring contract prices to 83 cents/lb.

This is the first time the contract prices have changed since the settlement of the September contract, which put the three producers at 83 cents/lb and the fourth at 90 cents/lb.

The September contract price had moved down from the August contract price of 90 cents/lb, which had rolled over from the July contract price. The June contract price was 107 cents/lb.

The producer that accounts for the smaller amount of the production had an August contract price of 96, preceded by a June contract price of 115 cents/lb.

The BD contract price in the US peaked this year at 152-155 cents/lb with the April contract price. That month was unique in that there was a split settlement among the three producers that account for 82% of the production capacity and the fourth producer settled its contract at 162 cents/lb.

Several buyers believed the November contract price would move down. When the November contract rolled over, buyers speculated that the US would be inundated with imports if the December contract rolled over and market conditions failed to improve.

The initial December contract price nomination came from the fourth producer, who proposed a rollover at 90 cents/lb.

That was followed by nominations from two producers at a reduction of 5 cents/lb. That was followed by a nomination of a 7-cent/lb reduction.

Buyers said the nominations calling for a reduction of 5 cents/lb was a step in the right direction, but that it would take more in order to stave off the possibility of imports flooding the US market.

In a matter of days, each of the higher price nominations from producers were moved down to a reduction of 7 cents/lb.

Typically, nominations are offered for the US BD contract ahead of the beginning of the month and then a settlement is reached.

The four US producers that take part in the contract negotiation process for US BD include ExxonMobil, LyondellBasell, Shell and TPC Group.

North American buyers include Ashland, INVISTA, LANXESS, Michelin and Negromex.

($1 = €0.77)

By: Wesley Busch
+1 713 525 2653

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