Price and market trends: US Q2 butanediol contracts settle higher

08 May 2014 17:26 Source:ICIS Chemical Business

US butanediol (BDO) negotiations to settle Q2 contracts resulted in a premium for most accounts, although the amount was slightly less than producers sought, sellers and buyers confirmed on 29 April.

ICIS assessed the prices for Q2 2014 at 128-133 cents/lb ($2,822-2,932/tonne), an increase of 3 cents/lb in the low end but only 1 cent/lb on the high end.

Producers had sought up to 5 cents/lb increases for BDO and up to 7 cents/lb for BDO derivatives such as tetrahydrofuran (THF) and polytetramethylene ether glycols (PTMEG).

The average price increase of the BDO derivatives has been 4-5 cents/lb.

Three major producers have confirmed the results that have been heard from buyers during the past couple of weeks, with mostly similar outcomes for BDO and its derivatives.

A fourth producer consumes BDO production internally and has not participated as much in the merchant market, although this is about to change in the second half of the year.

This is the first increase achieved in a quarterly settlement since April 2012, according to ICIS data.

The premium achieved reflects current US supply conditions that have been and remain on the tight side. However, many market participants think the market will be long by the end of the year.

The potential arrival of Asian imports is a topic that will linger on for months to come.

Some buyers have said that Asian producers are not ready yet to bring material to the US, and this may be related to a number of logistical constraints, permits and procedures for homologation of material that could delay shipments.

By George Martin