On-purpose BD will be 8% of global production by 2017 - consultant

16 April 2013 20:13  [Source: ICIS news]

SAN FRANCISCO (ICIS)--On-purpose butadiene (BD) will account for about 8% of global supply by 2017, an industry consultant said on Tuesday.

Bill Hyde, a C4 consultant for IHS Chemical, said that by 2022 that figure will increase to 10-12%. He made his comments during a speech at the International Institute for Synthetic Rubber Producers (IISRP) Annual General Meeting.

“[On-purpose] butadiene will become the global price-setting mechanism, but not until the mid-2020s,” he said.

While much of the talk in the US has been about TPC Group’s on-purpose BD project, expected to come online in 2017, Hyde said two on-purpose BD facilities are already up and running. These facilities are capable of producing about 800,000 tonnes of BD, but Hyde said the plants are running at about 60% of capacity.

That’s because over the next few years the petrochemical industry will be adding more capacity than is necessary, Hyde said. He sees “very soft growth” in BD demand for the rest of 2013, a slight uptick in 2014 and then perhaps stronger growth – but still modest – after 2015.

The BD market has been “terrible” for about a year, Hyde said.

“So far this year, we don’t have a lot of optimism [for demand],” he said. “But we also haven’t seen fire-sale type prices, either.”

Back in January, the general forecast for the US BD contract price was for prices to rise slowly, generally getting back to over $1/lb (€0.77/lb). That forecast has now been significantly reduced, and no one in the BD industry expects the price to get back to $1/lb in 2013.

In March, the US Gulf contract price for BD rose by 8 cents/lb to 84 cents/lb from 76 cents/lb. For April, the contract price rolled over and, according to most market sources, it is expected to drop by a few cents when the May contract price is negotiated over the next few weeks.  

Looking forward, Hyde said that on-purpose BD will be “the key game-changer” for the industry. He said there are only two places in the world where on-purpose BD will work – the US and China.

“Anywhere else in the world you don’t have low-cost feedstock, so you don’t have the same drivers,” he said.

($1 = €0.77)

By: Jeremy Pafford
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