LONDON (ICIS)--European butanediol (BDO) spot volumes have tightened due to limitations at two European producers, sources said on Tuesday.
Demand has remained consistently strong this quarter and one trader noted increased requests for product this week caused by limitations in the spot market.
However, buyers who purchase contract volumes are well supplied and find market dynamics remain balanced.
One European producer currently has no excess material available for the spot market due to high demand this month.
Another producer imposed sales allocations in preparation for a two-week planned turnaround expected to last for one month.
Overall, supply is balanced to snug, while healthy demand persists due to increased consumption during peak demand season, particularly from downstream derivatives polybutylene terephthalate (PBT), nmethyl-2-pyrrolidone (NMP) and gamma butyrolactone (GBL).
The automotive industry is performing well, adding to the ongoing healthy demand this year as confirmed by the latest car registrations statistics available.
Market players have opposing views about BP's force majeure on purified terephthalic acid (PTA) at Geel, Belgium, and whether it will impact BDO consumption next month or factor in to the upcoming third-quarter contract negotiations.
As third-quarter contract negotiations edge closer, players are beginning to position themselves and assess the wider market dynamics such as long-term trends, raw material costs, expected consumption and global market dynamics.
However, the negotiations will primarily be led by supply and demand dynamics.
Third-quarter contract negotiations are expected to begin in mid-June and conclude in late July.
BDO is a chemical intermediate used in the production of high performance polymers, solvents and fine chemicals.
Pictured: New cars at a PSA factory in France. The automobile industry is one of the end consumers for BDO
Source: M. Astar/SIPA/REX/Shutterstock