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May US butadiene contract price nominated 20 cents/lb lower: sources


May US butadiene contract price nominated 20 cents/lb lower: sources

May US butadiene contract price nominated 20 cents/lb lower: sources

Release time:2017-04-26 Number of views:155

The May US butadiene contract price received an initial nomination from  Shell Chemicals for a 20 cents/lb reduction, market sources said on  Friday, following a second month of global price drops.

This price cut would settle the May US butadiene contract price at 73 cents/lb ($1,609.36/mt), sources said.

Sources have been anticipating a price decline in butadiene  contracts for May after another month of substantial falls in Asia and  the US.

"Supply is longer and the price is going to fall pretty severely in  May," a trader source said last week before the announcement.

Since reaching a 2017 peak of $3,070/mt on February 3, the CFR China  marker has lost 58.46% using the most recent assessment, according to  S&P Global Platts data. The US market reached a 2017 peak of 132.50  cents/lb on February 24 and has lost 39.62% since that time, according  to Platts data.

While the majority of the movement in the US has been driven by  price cuts in Asia, sources have said improving US butadiene supply is  also a factor.

"The US butadiene supply is improving from a tight situation into a lengthy balance," another trader source said.

Talk earlier in the month suggested 80 cents/lb potentially being  the target level for May contracts, but with recent trends, sources said  a larger decrease could be warranted, with multiple market participants  pointing to a potential level of 70 cents/lb.

Of all the producers involved in the contract price negotiations --  ExxonMobil, LyondellBasell, TPC Group and Shell Chemicals -- only Shell  Chemicals has been heard to have nominated a price level, sources said.

Requests for comments and/or confirmation were not immediately returned by the other three producing companies.

As butadiene spot prices moved lower month on month, they were heard  to be valued at the April contract level, sources said. As the month  continued, spot offers moved below the April contract price, sources  said.

"If you wanted to sell now, you would have to look at contract price  with a discount for pricing," the first trader source said last week.

"We did receive several spot butadiene offers for May delivery," a  buyer source said, adding that "no fixed price offer is available or  wanted. Most offers follow May CP."

US spot import butadiene was assessed at 79.50-80.50 cents/lb  ($1,753-$1,775/mt) CIF USG, down 13 cents/lb ($287/mt) from last Friday.