BASF targets BDO price hike on strong demand, margin pressure

11 March 2013 12:20  [Source: ICIS news]

LONDON (ICIS)--BASF is targeting €80/tonne ($103/tonne) price hikes for European butanediol (BDO) from 1 April on strong demand, higher costs and pressured margins, a company source said on Monday

“The basis of the increase has three reasons. Firstly we see robust demand globally and we’ve made comparable announcements in all three regions. The market is in good shape and we’re seeing better demand in general from downstream markets linked to automotive and engineering industries," the source said. 

“The second reason is that energy and utility costs are going up and the third reason is overall margin pressure.”

In an earlier media statement, the company said that with immediate effect, or as existing contracts permit, it would increase its BDO selling price by €80/tonne. BASF also announced that it would be increasing the price of tetrahydrofuran (THF) – a derivative of BDO – by €50/tonne.

The BASF source added that the price of BDO has been in decline since 2012. According to ICIS data, the BDO quarterly contract price has moved down since the third quarter of 2012.

Buyers of BDO are aware that the market has been under pressure from poor downstream demand and weak macro-economic conditions and said they were not surprised that second quarter increases were being sought.

A large contract customer said: “Suppliers are unhappy because of margins. I don’t see any tightness and the market still feels fairly depressed.”

However, the buyer said that if “real” downstream demand picks up and the European market  tightens, second quarter prices may firm “a little bit”.

Second-quarter contract negotiations are expected to start in earnest during the second half of March.

Major BDO derivatives are polybutylene terephthalate (PBT) and THF. BDO is also used in polyurethanes (PU), fibres coatings, elastomers and foam sectors.

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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