Europe Q2 BDO contract discussions underway, price ideas wide apart

09 April 2013 17:51  [Source: ICIS news]

LONDON (ICIS)--European butanediol (BDO) Q2 contract negotiations are under way, but the price ideas being discussed by producers and consumers are somewhat apart, sources said on Tuesday.

One producer, which is seeking an increase from the first to second quarter, said: “It is still very early and we will wait for the end of the month because people will need to invoice.

“I am not budging [on price]. This market is all about supply and demand. People are buying and my stocks are on the very low side. Demand is good and we are not sitting on inventories.”

A second producer was also not backing down from its original intention to increase its quarterly contract price, but it did admit that it had revised its original target down.

On the buying side, a major consumer of BDO said: “Unfortunately there is no settlement yet, but we are holding firm to our decrease of €100/tonne ($130/tonne), since we’re pretty sure that the automotive sector will not pick up anymore this year. Asia is also still slow.

“Producers of BDO don’t want to give in yet, although one has already agreed to a little decrease of €20/tonne – but in our view the decrease is not big enough.”

The major BDO buyer said it believed 2013 would not be a “good year” for the automotive industry.

Meanwhile, a smaller BDO buyer consuming for the coatings sector said it too was in the early stages of its contract negotiations.

“We are the very early stages and [have] not closed anything yet. Suppliers have indicated €30-40/tonne [increases], but we should have a rollover because in the coatings sector demand will not support an increase,” the buyer said.

Demand from the coatings sector has been unusually low for the time of year because of the below-average temperatures across much of Europe and the general economic malaise impacting on consumer confidence.

The Q1 BDO contract was agreed at €2,060-2,110/tonne free delivered (FD) northwest Europe (NWE), down by €30/tonne from the previous quarter.

Major producer BASF announced in early March that it was targeting an €80/tonne price increase from 1 April on strong demand, higher costs and pressured margins.

Key BDO derivatives include polybutylene terephthalate (PBT). BDO is also used in the polyurethanes (PU), fibre coatings, elastomers and foam sectors. 

($1 = €0.77)

By: Julia Meehan
+44 20 8652 3214

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