Price and market trends: US BD demand 'cyclically weak' but improving

14 April 2014 00:00 Source:ICIS Chemical Business

Demand for butadiene (BD) remains “cyclically weak” but is showing signs of improvement, the CEO of TPC Group said on 31 March.

Global BD production will be affected this spring by a more pronounced turnaround season in Asia, said Mike McDonnell, who made his comments 
on the sidelines of the International Petrochemical Conference (IPC), run by the American Fuel & Petrochemical Manufacturers (AFPM).

However, there will be enough product available to meet demand, the CEO said.

US BD“I think we’re going to be reasonably adequately supplied,” McDonnell said.

BD prices have been volatile in the US in the past year, rebounding in recent months.

US April BD contract prices settled at 68 cents/lb ($1,499/tonne) for three producers and 78 cents/lb for a fourth producer. The three producers who settled at the lower price represent roughly 85% of the US BD market, which kept the US weighted average at 69.80 cents/lb.

With many US chemical producers shifting to lighter feedstock amid the US shale gas boom, TPC is constructing a 270,000 tonne/year on-purpose BD unit in Texas based on old butane conversion technology. Start-up is scheduled for late 2016.

Even with the new plant, the US will remain net short on BD in the long term, McDonnell said. TPC’s on-purpose plant will be well-positioned in the market due to its use of butane feedstock, which will be plentiful due to the shale boom’s production of natural gas liquids (NGLs), he said.

By Jeremy Pafford