Q3 US BDO talks underway, no agreement yet

09 July 2013 22:23  [Source: ICIS news]

HOUSTON (ICIS)--North American butanediol (BDO) contract negotiations for third quarter have started, but only a handful of contracts have settled, sources said on Tuesday.

Producers have been pushing for a rollover. They see demand as being steady although not at the best of levels.

A few negotiations have closed at a discount of 1.5 cent/lb ($33/tonne, €26/tonne) off Q2 prices, and others have achieved a rollover.

However, the majority of deals are still being discussed.

Buyers are seeking discounts, based on soft demand, increased capacity in Asia and overall lacklustre global economy.

There was material from Asia/Middle East seen arriving in Houston at $2,100/tonne (about 95 cents/lb) CFR for large volume (about 500 tonnes), a source said, and this was seen as a pressure factor for the ongoing negotiations.

One producer said that Asian demand from the (PBT) sector was slowing down, and supply was getting longer.

Maleic anhydride-based production was said to be slowing down in Asia because of unfavourable economics.

BDO demand has remained steady in the US, particularly in areas related to the automotive sector.

At least for one seller, demand from the tetrahydrofuran (THF) sector has declined in recent months, while N-methylpyrrolidone (NMP) demand is up, but not by much.

The US economy appears to be performing better than other regions of the world, and this suggests that if prices decline in Q3 BDO settlements, the decline could be much smaller than in other regions.

With some producers anticipating final Q3 contract settlements in late July, there was not a sense of urgency to produce the settlements.

($1 = 0.78)

By: George Martin
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