Initial US Sep BD contract nominated at 5 cent/lb increase

22 August 2017 18:23 Source:ICIS News

small tyreHOUSTON (ICIS)--US butadiene (BD) contract prices for September have been nominated by a producer at a 5 cent/lb increase, sources said on Tuesday, as supply has tightened following exports.   

If accepted by buyers, the nomination would put the producer's September contract price at 42 cents/lb, ($926/tonne), about a 14% increase over its August price of 37 cents/lb.

US BD contract prices in August had settled in a range of 37-40 cents/lb, with a direct average of 39.25 cents/lb.

US BD prices had been under pressure since April from a long domestic market and falling global BD values.

In the US, supply lengthened during the second quarter as production issues from earlier in the year were resolved and as a downstream turnaround limited demand. Supplies have also been bolstered from increased cracker capacity in the US, which has kept some downward pressure on the market through much of the third quarter.

US BD contract prices had fallen from a multi-year high of 110 cents/lb in March.

Falling global prices, led by a steep decline in Asia, had added more downward pressure to US prices. BD spot prices in the region had fallen by $2,000/tonne from February to June. However, spot prices in Asia began to stabilise during June and July and have been strengthening in August.

Amid the supply length in the US and recovery in Asia, several cargoes were heard being shipped from the US to Asia. A total of about 11,000-16,000 tonnes were heard in August and about 9,000 tonnes in July.  

The exports have helped balance domestic supply while higher global prices have helped bolster domestic BD values. BD spot prices moved higher last week to 37-39 cents/lb, up from 33-37 cents/lb earlier in the month.

Still, expectations for September contract prices had been mixed ahead of nominations, with some sources seeing US supply as still readily available and others expecting the tightened market could pressure prices higher.

US BD contracts typically settle at the end of the month for pricing in the upcoming month.

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

In cents/lb

Sep Nom

Aug Settle

Producer 1

42

37

Producer 2

TBD

40

Producer 3

TBD

40

Producer 4

TBD

40

 

By Jessie Waldheim