Price and market trends: Europe BDO price targets emerge for Q3 contracts

28 June 2013 09:59  [Source: ICB]

Third-quarter pricing targets for the European butanediol (BDO) market have emerged, 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 18 June.

The demand outlook for the next quarter is stable to slightly down, as volumes are likely to be reduced as is usual 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.

Q2 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.

The producer 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: "The usual holiday month will be weaker, but it won't be an appreciable softening."

"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."

The buyer said there is no tightness. "There is volume available from European producers. Nobody is running at full capacity."

Another buyer said: "The whole year looks flat, apart from seasonality in summer months. It's purely because of the economy."

For feedstock methanol, an initial settlement has been agreed between a supplier and a consumer for the Q3 contract at a rollover.

Q3 BDO contract negotiations are expected to commence within the next couple of weeks.

By: Helena Strathearn
+44 208 652 3214

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