US March BD contracts nominated up 11, 26 cents/lb

HOUSTON (ICIS)–US butadiene (BD) contracts for March were nominated on Friday by two producers at respective increases of 11 cents/lb and 26 cents/lb.

Several buyers confirmed that one producer has nominated a rise of 11 cents/lb, which would put its March contracts at 110 cents/lb ($2,425/tonne) from its February pricing of 99 cents/lb. The other producer has nominated a hike of 26 cents/lb, which would put its March contracts at 116 cents/lb from its February pricing of 90 cents/lb.

Earlier in the week, another producer opted not to nominate an actual price for March contracts, but rather a value equivalent to an industry formula tied to the individual settlements of major UD BD contract producers. Because of a plant turnaround, the company’s price will not be included in the March calculation, which is said to represent a weighted average of the remaining three settlements.

Market participants had been expecting March contract nominations to emerge at double-digit increase, although it had been unclear to what extent.

Domestic supply has been very tight, with two producers on allocation. Other supplies have asked customers to take minimum volumes on contract obligations.

Excess BD has been hard to find as cracker turnarounds and plant issues have curtailed output of Crude C4, reducing feedstock used for the production of BD.

Additionally, a BD extraction unit is undergoing a turnaround in February and March, while another unit is expected to shut for planned maintenance in March and April.

Constrained supply has opened up opportunities for traders to import volumes from Asia and push up spot prices in the US market.

For now, market participants await for the March contract nomination of one more US BD producer.

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

*The company is nominating a price equivalent to an industry formula tied to the individual settlements of major US BD contract producers. The company’s price will not be included in the March price calculation, which is said to represent a weighted average of the remaining three settlements.

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