AFPM ’19: US Q2 BDO could settle flat-to-down on balanced supply, demand

HOUSTON (ICIS)–With no supply-demand imbalance anywhere in the world of butanediol (BDO), the US market heads into this year’s International Petrochemical Conference (IPC) looking to settle Q2 contracts at either a rollover or reduction.

A price increase seems unlikely, considering that none have been nominated, repeating the same situation that occurred in the first quarter.

Feedstocks are either flat or down, with maleic anhydride (MA) contracts rolling over in the latest month while methanol and propylene dropped.

The odds of a rollover seem thin at best, namely because there is never more than a slim chance of a rollover in any given quarter. Price history shows that there has been only one no-change quarter for US BDO in any three-month period of the past decade.

A long-time buyer said the BDO quarterly time frame does not seem suited to a rollover.

“It’s almost never a situation where nothing’s changed in the past three months,” the buyer said.

Even though the major BDO feedstocks are, as they were in the first quarter, in flat-to-down mode, he said the market has seen big change this year.

Ashland exited the BDO business in Europe but is maintaining its 55,000 tonne/year plant in Ohio. That company hinted a few years ago about getting out of the business, but Ashland said it will continue in the US BDO market to service its downstream and derivative customers.

And INVISTA now has a new name, The Lycra Company, following its acquisition by the Shandong Ruyi apparel conglomerate for an estimated $2bn earlier this year.

Meanwhile, the veteran buyer said 2019 has become a buyer’s market in BDO, what with no plant issues, plenty of supply and the cost of production remaining stable or slightly lower.

“I’ve got people lined up outside my door trying to sell me product,” the buyer said.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Lane Kelley