Europe spot butadiene prices rise above contract price

03 October 2013 12:35  [Source: ICIS news]

(recasts, clarifying quote in final paragraph)

LONDON (ICIS)--Spot European butadiene (BD) prices on both the export and domestic markets have risen above the prevailing contract price on the back of tightening availability and heightened demand from Asia, market sources said on Thursday.

Spot export prices have soared to highs not seen since end May/early June, and have surpassed the prevailing contract value for the first time in over a year.

Spot export prices were assessed last Friday at $1,050-1,100/tonne (€777-814/tonne) FOB (free on board) ARA (Amsterdam-Rotterdam-Antwerp) while the contract price for September stood at €775/tonne FD (free delivered) NWE (northwest Europe).

However, this week discussion was centring on a range of €1,150-1,200/tonne and above, and one 1,000-tonne lot was heard done – although unconfirmed – at $1,210/tonne – equivalent to €895/tonne. The October contract price settled this week at €825/tonne.On the domestic market, spot prices were being indicated at €825/tonne and up to €865/tonne, according to sources. The last time domestic spot prices were above the contract price was in April 2013.

BD supply has tightened in Europe largely because of maintenance turnarounds at crackers that have restricted the output of crude C4 (CC4), the feedstock for BD. Some BD-producing units have yet to increase operating rates; producers had to balance their systems by reducing run rates when both spot and contract demand was soft.

A pick-up in Asian demand – a key outlet for European tonnes – has been another factor. Spot prices picked up significantly over the past month on the back of what is primarily seen as supply-driven speculation rather than a structural improvement in demand

“Demand in Europe is relatively good, so there is not much left for Europe,” a trader said.

One BD producer echoed this view, saying that contract demand was “not so bad” and that its production for the month would continue to plan.

Other BD producers have certainly had their interest piqued by the rising spot numbers

“Everyone is searching for molecules,” a second producer said, adding, “we are checking from our side if we can sell something.”

($1 = €0.74)

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By: Nel Weddle
+44 20 8652 3214



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