AFPM ’14: US Q2 BDO contract talks are ongoing in San Antonio

31 March 2014 23:02 Source:ICIS News

SAN ANTONIO, Texas (ICIS)--The outcome of US Q2 butanediol (BDO) contract negotiations is being discussed by suppliers and buyers during an industry meeting, sources said on Monday on the sidelines of the International Petrochemical Conference (IPC).

Producers have made it clear that they are looking to increase the price of BDO and its derivatives by 5-7 cents/lb in the second quarter, while buyers point at flat sales and potential supply increases as pressure factors to keep prices unchanged or to get a discount.

One US producer is gearing up to have new volumes available for US buyers in the fourth quarter or slightly earlier, and that entry could alter the market share for existing suppliers.

Trading houses are also looking to bring Asian product into the US at prices that could significantly change the current price structure, a buyer said.

Some companies have feedstock-related contracts that are coming up for renegotiation soon, posing a dilemma for the buyers who would not want to tie themselves to a long contract at a time when prices could fall significantly.

Producers would like to extend contracts as early as possible to solidify market share at the current prices.

The situation gets more complicated for buyers that need BDO and its derivatives in more than one region. Gains achieved in one region could be washed out with losses in another, depending on technical details of each situation.

Market players expect to find some of these answers in the next couple of days.

US main BDO producers are Ashland, BASF, Invista and Lyondell Chemical.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC continues through Tuesday in San Antonio.

By George Martin