18 June 2013 18:07 [Source: ICIS news]
LONDON (ICIS)--Third-quarter pricing targets for the European butanediol (BDO) market emerged this week, with buyers seeking a rollover at most and decreases of up to €50/tonne ($67/tonne), while producers are aiming for a rollover at minimum, sources said on Tuesday.
The demand outlook for the next quarter is stable to slightly down, as volumes are likely to be reduced as is traditional during the summer holiday period. September demand, however, is likely to show some uptick after slow August demand.
One buyer that expects to see a drop in its third-quarter volume requirements estimated its demand is lower by 12% compared with third-quarter 2012, because of economic instability.
Second-quarter demand from the derivative polybutylene terephthalate (PBT), elastane and thermoplastic polyurethane (TPU) sectors is steady and balanced with supply.
One BDO producer said: “Nobody’s building inventory yet. Customers want a decrease because of what they see in Asia, and they feel they're owed one. We’re balanced. I don't see that a decrease is needed."
Pricing in Asia is steady to soft.
It added: "August [demand] will be softer but September will be strong. So overall demand [in the third-quarter] is steady or lightly down."
Another producer said: “We don't see the market as pessimistic. The usual holiday month will be weaker, but it won’t be an appreciable softening."
“My general perception is that pricing is still too high,” the buyer said. “Producers are still enjoying much better margins than during the peak in 2009. We are aiming for a further reduction. We even had an increase last quarter so I would expect, at a minimum, to go back to the Q1 price.”
It said there is no tightness on the market. "There is volume available from European producers, nobody is running at full capacity at the moment."
Another buyer said: “The whole year looks flat, apart from seasonality in summer months. It's purely because of the economy."
Third-quarter BDO contract negotiations are expected to commence within the next couple of weeks.
Follow Helena Strathearn on Twitter
($1 = €0.75)
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