28 June 2013 23:49 [Source: ICIS news]
HOUSTON (ICIS)--The US July butadiene (BD) contract prices among the three producers that account for about 85% of the market settled down 8 cents/lb ($176/tonne, €136/tonne) at 66 cents/lb, sources said on Friday.
A fourth producer, which accounts for about 15% of the market, was heard to have settled at 73 cents/lb.
The contract price settlement required a bit of tactful negotiation and brow-beating, sources said. Producers agreed early on to the price settlement; however, buyers were said to have pushed back, arguing that the 12.1% month-to-month decline was not enough to reflect a market in freefall on a global depression in the replacement-tyre market.
Sources said that some customers were demanding that the July contract price drop to 60 cents/lb, which some producers had hinted would be the price for August. Buyers argued that producers should skip the incremental decline and go straight to the August price.
At the end of protracted negotiation, producers held firm at the 66 cents/lb price.
Some buyers said that they now expect the August contract price, barring some miraculous turnaround in the replacement-tyre market, to fall as low as 57 cents/lb.
It has been a precipitous six months for BD producers, who started the year with expectations that prices would slowly climb from 76 cents/lb in December to more than $1/lb by midyear.
US BD contract prices hovered at 76 cents/lb through February and then rose to 84 cents/lb in March. Producers managed to stave off calls to cut prices in April, but then lowered them to 79 cents/lb in May and 74 cents/lb in June.
US producers of BD include ExxonMobil, LyondellBasell, Shell and TPC.
($1 = €0.77)
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