09 October 2013 10:33 [Source: ICIS news]
LONDON (ICIS)--Fourth-quarter contract negotiations in the European butanediol (BDO) market are starting to lean towards a rollover or a slight reduction in prices, sources said late on Tuesday.
Market players have been expecting demand in the fourth quarter to be broadly stable from the third quarter, lending credence to arguments for a rollover.
Some producers acknowledge that the presence of cheaper Asian material is putting some downward pressure on prices.
However, the average cost of feedstock propylene in the third quarter rose from the second quarter, cutting into producers' margins.
This increase in costs, together with some signs of an improvement in macroeconomic conditions, has made producers resistant to calls to cut BDO prices.
“I won’t say there’s a very clear picture yet. But there is a fair chance it’s going to be close to rollover (for the fourth quarter). I don’t see big movements (in prices) really,” a producer said.
Another producer said the direction of prices will be clearer after the annual European Petrochemical Association (EPCA) conference, which was held this week in Berlin.
This producer said that it now expects its customers at the higher end of its price range to have a reduction of €20-30/tonne, while customers at the lower end of its price range are expected to see rollovers.
Some buyers said they expect lower prices because of long supply and cheaper BDO from overseas. ICIS data show that the difference between average BDO prices from northwest Europe and Taiwan is around €460/tonne ($622/tonne).
One buyer said on Sunday it expects BDO supply in Asia to remain long for at least the next three to five years, fuelling imports into Europe.
($1 = €0.74)
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