August contract headed for gain
The US butadiene (BD) contract for August moved a step closer to settling during the week ending 29 July, with nominations ranging from 175 cents/lb to 186 cents/lb.
Three of the four nominating producers agreed to nominate at 175 cents/lb – up 5 cents/lb from July – while the fourth producer dropped its earlier nomination from 190 cents/lb to 186 cents/lb, sources said. The latter figure would result in an increase of 11 cents/lb for the fourth producer.
The nominations showed an increase in the August settlement was on the way, with another split settlement likely.
The July settlement range was 170-175 cents/lb, with three producers settling at 170 cents/lb, and the fourth producer settling at 175 cents/lb.
The lack of supply continued to be the primary driving force behind upward BD price movement, while a lack of crude C4 was the primary reason that BD was tight.
Downstream demand from the styrene butadiene rubber (SBR) tyre sector remained firm, with original equipment manufacturer (OEM) tyre production offsetting some of the weakening seen in the replacement tyre sector.
Most BD is used to make SBR, and replacement and OEM tyre sales make up the bulk of SBR demand.
SBR sources noted that as BD costs climb, the production costs of SBR also move up, and could soon reach a point at which demand begins to erode. If the run-up in SBR prices chases off demand from the tyre sector, then SBR producers will back off on operating rates. That could result in a drop in BD demand, thus resulting in lower prices, the sources said.
However, a BD producer said prices were likely to remain firm in the coming weeks as supply becomes tighter amid scheduled turnarounds.
After the final settlement of the August BD contract, a weighted average will be posted.
The table below shows the four most recent BD weighted average settlements.
| Settlement month | Jul | Jun | May | Apr |
| Est Wtd Avg Settle | $1.707/lb | $1.526/lb | $1.417/lb | $1.213 |
Other regions
FOB ARA prices Europe slid $200/tonne on the high end of the range to $3,900-4,000/tonne, while FD Inland values came off €100-200/tonne to €2,600-2,700/tonne.
Sellers in Europe said they had been contacted by US buyers for August deals, but no trades had yet been made. Supply was more readily available in Europe than in the US.
CFR NE Asia, SE Asia and Taiwan prices came off $100/tonne on both ends of the range at $4,000-4,050/tonne.
Crude C4
Crude C4 supply continued to be tight globally, but softening BD prices in other regions kept a cap on C4. The factor values were 1.80 times naphtha for the week. However, export factor-value figures were seen as high as 1.91 times naphtha.
In the US Gulf, formula-based crude C4 values were down slightly because of a drop in regular-grade gasoline values and natural-gas prices.
Production news
Shell has a turnaround scheduled for the month of September, and ExxonMobil has a turnaround scheduled to begin late in September and lasting through October, a producer said.
| Indicative Feedstock Butane Prices – Mont Belvieu, TX |
| US$/gal | July 29 | July 22 | July 15 | July 08 |
| Butane | 1.94 | 1.85 | 1.86 | 1.89 |
| USG Gasoline | 3.01 | 3.07 | 3.06 | 3.05 |
| NYMEX Closing | July 29 | July 22 | July 15 | July 08 |
| Crude Oil | 95.70 | 99.87 | 97.24 | 96.20 |
| Natural Gas | 4.15 | 4.39 | 4.55 | 4.21 |
($1 = €0.70)
This week on ICIS news ( www.icis.com ):
27-Jul-11 05:58 Rising SM prices in Asia open US-China arbitrage
26-Jul-11 10:02 Asia ABS demand weakens on US, Eurozone debt woes
26-Jul-11 09:16 Germany’s LANXESS, China’s Triangle Group sign butyl rubber deal
25-Jul-11 17:34 Solutia to build polyvinyl butyral plant in Malaysia complex
25-Jul-11 11:31 Japan’s Nihon Oxirane ups Aug SM contract nomination by $30/tonne
