US Q3 1,4 butanediol contract talks nearing completion

23 July 2014 22:41 Source:ICIS News

HOUSTON (ICIS)--US 1,4 butanediol (BDO) negotiations for third-quarter (Q3) contracts are close to completion with most contracts negotiated, although some producers are yet to report results, according to market participants polled on Wednesday.

So far, the negotiations have yielded mixed results, which could be related to the timing of the negotiations.

One producer said its negotiations have averaged a premium of 4 to 4.5 cents/lb over Q2 contract settlements.

Another one had contracts settled at a rollover, some up 3 cents/lb and some down 3 cents/lb.

In the middle of the negotiations, BDO and its derivatives were affected by a force majeure declared by one of four US producers.

US 1,4 butanediol (BDO) producer INVISTA declared force majeure for production of BDO and its derivatives at its LaPorte, Texas, manufacturing facility because one of its primary raw material suppliers was experiencing technical difficulties, according to the company’s letter to customers.

A raw material supply shortage disrupted INVISTA’s global sales and supply chain for poly tetramethylene ether glycol (PTMEG), tetrahydrofuran (THF) and BDO.

This force majeure has likely affected the most recent Q3 BDO contract negotiations, but some contracts were already settled prior to this supply constraint.

INVISTA implemented a sales allocation to account for the loss of ability to maintain full delivery rates of the mentioned products.

Another producer was said to be also practicing product allocation, because its stockpiles are very thin ahead of the hurricane season.

However, one large buyer said the force majeure has not been very restrictive and does not think supply is tight.

Final settlement could happen the week of 28 July, when most negotiations are concluded.

The main BDO producers in the US are BASF, Ashland, Lyondell Chemical Company and INVISTA.

By George Martin