US BDO buyers expected hikes because of force majeures

Source: ICIS News


HOUSTON (ICIS)--US butanediol (BDO) buyers on Tuesday said they expected recent nominations for a 9 cent/lb ($198/tonne) increase for the fourth quarter because of recent force majeures in that market.

Producers BASF and LyondellBasell separately issued hikes for that amount late last week. Buyers said it was no coincidence that the increases followed the late August weather catastrophe that struck the Texas Gulf coast.

Both of the increases are scheduled to take effect on 1 October.

US BDO prices have jumped nearly 26 cents/lb in the past year on a trio of global events, rising first on higher prices in Asia, and then in July a force majeure at an Ashland plant in Germany, and last week some force majeures in the US tied to plant issues in Texas.

Two producers, LyondellBasell and Invista, declared force majeure last week because of plant issues stemming from Hurricane Harvey.

Both producers have BDO plants in the Houston area, which has been hit by torrential rain and flooding because of the storm.

Sources said INVISTA and Ashland have not issued an increase for Q4.

A buyer pointed out that LyondellBasell declared force majeure on BDO and then issued a price increase. But that buyer said the proposed hike at this point seems likely to gain acceptance.

“This increase can hold, because there are two plants on force majeure, and it seems like there should be a shortage of BDO.”

But another buyer was unsure about there being a US shortage of BDO.

There have been reports of producers shipping BDO to Europe to make up for the shortfall from Ashland’s force majeure because of a fire at its plant in Marl, Germany.

But the US buyer said BDO can still be obtained in the US and that it is too early to make any predictions about the chances for the Q4 increase.

“The haggling hasn’t even started on that one yet,” the buyer said. “It’s too early to say right now” what the chances are for the increase, the buyer added.