Triple-digit hikes expected in ongoing Europe Q3 BDO contract talks

28 June 2017 09:30 Source:ICIS News

Dollars and eurosLONDON (ICIS)--Third-quarter European butanediol (BDO) contract negotiations continue, with triple-digit increases expected by some players on both sides of the market, sources said on Wednesday. 

Two European producers have separately announced price increase targets of €200/tonne for third-quarter contracts.

Although last week lower increase targets were heard from some buyers, others this week said triple-digit price increases were likely for contracts.

Tight supply, healthy demand and the previous drops in contract prices over the last four years were all cited as the drivers of the increases.

Supply remains tight, although players have noted a slight easing, following the restart of LyondellBasell's Botlek operations in the Netherlands. The facility had been down for a planned maintenance stoppage, which started in March and finished in May.

Some buyers are covering requirements by boosting supply with Asian imports, although prices there have also increased substantially this year.

Some sellers are unclear if the current proposed increases for the third quarter will be sufficient to make Europe attractive as a regular exporting destination for sellers outside of the region.

Demand remains healthy, with solid levels across all downstream applications. Sellers also continue to see a high level of requests, linked to the supply constraints this year.

Inventories are at a low level throughout the chain, with many unable to obtain the regular levels of material in the second quarter.

The overall supply balance is expected to improve by many buyers in the market, with an increase in imports expected in Q3 and European production back to normal running rates.

By Katherine Sale