US March BD contracts settle at rollover, end nine-month decline

HOUSTON (ICIS)–US butadiene (BD) contracts for March have been finalised at rollovers, sources said on Thursday, halting a streak of nine consecutive months of price declines.

The settlement separately puts March contracts for one producer at 27 cents/lb and two producers at 29 cents/lb, flat from February pricing. The rollover puts March contracts for the fourth producer at 34 cents/lb.

As a result, the ICIS weighted contract average remains at 29.14 cents/lb in March from February.

Buyers had been expecting March BD contracts to decline by 2-5 cents/lb, but talk of production issues on Wednesday and Thursday of last week had caused concerns that contracts may roll over.

When initial nominations were released, however, producers were aiming for rollovers to increases of 2 cents/lb.

Even after two renominations put targeted March pricing from all four producers at rollovers, some buyers continued to push for decreases on Wednesday and Thursday, arguing that fundamentals remained very weak and that BD prices must drop in order for derivative producers to remain competitive in the global markets.

However, there was concern that the European market, which exports a lot of BD to the US, would not be able to support a contract price decrease because production and feedstock costs there remain high.

Additionally, some market sources believed that a rollover in contract pricing would establish a bottom and stimulate spot purchases from buyers who had been waiting on the sidelines.

Major US BD producers include ExxonMobil, LyondellBasell, Shell Chemical and TPC Group.

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