Europe butadiene spot export prices hit 13-week high

20 September 2013 13:33  [Source: ICIS news]

LONDON (ICIS)--European spot butadiene (BD) export prices have risen to 13-week highs mirroring recent events in Asia because of supply-related issues, market sources said on Friday.

Asian prices were being assessed by European players at around $1,460-1,470/tonne (€1,080-1,088/tonne) CFR (cost & freight) China on Friday, up from the low to mid $1,300s/tonne last week. Higher prices – at or above $1,500/tonne CFR Asia – were also being talked about for October.

As a result, and given a typical Europe-Asia freight rate of around $350-400/tonne, European export prices are now being discussed at $1,000/tonne plus – a four-digit export price has not been seen since mid-June.

However, European availability is limited since producers had effectively aligned BD output with soft demand for the past few months through a combination of rate reductions, crude C4 (CC4) feedstock co-cracking and feedstock slate and other operational tweaks at the cracker level.

It is not clear whether the current firmer trend will be enough of an incentive for producers to increase operating  rates – $1,000/tonne FOB (free on board) NWE (northwest Europe) is still below the prevailing contract value.

“We have had a couple of enquiries for Asia” one producer said, adding “ it [the spot price] has improved but it's lower than the contract price so I am not sure [traders] will succeed in fixing volumes from Europe.

“The game is focused on securing volumes rather than the lowest FOB price,” a trader said.

Sources said the real difficulty came from being able to gauge whether the rises were sustainable.

Demand fundamentals have not changed – styrene butadiene rubber (SBR) market sources do not anticipate much, if any, improvement in the end-user tyre market before the year-end, while new plant start-ups cannot be delayed indefinitely.

“I hope it will last,” a second trader said, adding “but it’s a high-risk profile, that’s for sure.”

($1 = €0.74)

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By: Nel Weddle
+44 20 8652 3214

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