Producers aimed for increases on seasonal uptick in demand while buyers argued for fall
The majority of first-quarter European butanediol (BDO) price contracts having been settled, prices were assessed by ICIS at a rollover from the first quarter of the year on 29 April.
This is the first time the BDO market has seen rollovers in price in three consecutive quarters since 2007, according to ICIS data.
Prices are assessed at €2,025-2,075/tonne FD (free delivered) NWE (northwest Europe).
Many producers aimed for small increases on the back of the normal uptick in demand for the second quarter of the year, higher usage in downstream industries and a tighter market as the result of planned second-quarter turnarounds.
Buyers, on the other hand, saw demand as balanced to weak, and pushed for price decreases on the back of recent feedstock methanol price decreases. The second-quarter Europe methanol contract price fell by €33/tonne.
However, participants moved their targets closer to a rollover as negotiations progressed in order to reach a compromise.
Increased BDO production capacity in Asia, particularly China, was a long-term concern for many participants, but most agreed that additional material from that market was not yet being seen in Europe in large quantities.
One producer that achieved prices ranging from rollovers to decreases of €20/tonne FD NWE in its negotiations, said, “It’s a compromise that both sides can live with. We can hope that demand is getting better.”
It added: “Today we are more relaxed on Asia although people are still concerned - it was bigger news last year.”
One buyer, which settled at a rollover to a decrease of €10/tonne FD NWE, said: “When I looked at what is happening to methanol, I would not have expected to have a rollover. The spot price went down to about €320/tonne FOB (free on board) yesterday, and we have seen huge changes in only three weeks.”
It added: “There is definitely some softness on the side of raw materials, and I would have expected to see that reflected more significantly on the BDO side.”
The majority of participants’ contracts were settled at or close to a rollover from the first quarter.