Softness may persist in US BD amid ongoing sluggish demand

HOUSTON (ICIS)–Downward pressure may persist in US butadiene (BD) markets amid continued sluggish demand, tracking a global trend.

The ICIS Contract Reference Price (CRP) for US June BD settled at 46 cents/lb ($1,014/tonne) FOB (free on board), down by 3.25 cents/lb from May.

US BD Contracts (in cents/lb, separately issued)

	June Settlement	May Settlement
Producer 1	46	49
Producer 2	46	49
Producer 3	46	50
Producer 4	46	49

The June decline followed three consecutive rollovers. US contract prices remained stable in the spring amid uncertainty regarding the impact of planned and unplanned outages and logistics constraints in multiple regions.

Europe had a particularly heavy turnaround schedule, and some logistics constraints related to the fire at Intercontinental Terminals Company (ITC) impacted the supply chain in the US.

Still, markets never tightened as these issues were offset because the Q2 demand uptick that market players worldwide had expected never materialised.

“In other years, these supply issues would have caused more problems,” a source said. “We’ve been waiting for prices to go up for a few months, but nothing has happened because demand is weak.”

June contract prices also fell in Europe.

US market players anticipated flat to lower prices for June as spot prices began to tick downward in May after hovering around contract value levels through March and April.

US spot prices are currently assessed at 43-45 cents/lb CIF (cost, insurance and freight).

Barring unexpected outages, length will be built in US BD markets as turnarounds wrap up and as new crackers come on line, keeping feedstock crude C4 (CC4) well supplied.

Derivative demand is not expected to grow this year, raising the question of where the material goes.

“Demand won’t pick up anytime soon for anyone,” a source said. “Robust demand from Asia isn’t there.”

Market players are eyeing a spot-price rebound in Asia, where supply is tighter but demand remains sluggish and is likely to continue soft amid trade tensions between China and the US.

BD is a key feedstock for synthetic rubbers, largely styrene butadiene rubber (SBR), which is used in tyre manufacturing. BD is extracted from crude C4s.

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

Photo above shows tyres, which are made with SBR. Image by Mood Board/REX/Shutterstock