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Wednesday, August 17, 2022

April US butadiene CP nominated 17 cents lower: sources

The April US butadiene contract price received an initial nomination from ExxonMobil and Shell Chemicals for a 17 cents/lb reduction, market sources confirmed on Thursday, following the massive global drops in price over the past month.

This price drop would settle the April US butadiene contract price at 93 cents/lb ($2,050.278), sources said.

Sources have been anticipating a price decline in butadiene contracts for April after substantial falls in Asia and the US. Over the past month to date, spot CFR China prices lost 27.9% of value using the most recent assessment and spot CIF USG prices lost 17.4% during the same period, according to S&P Global Platts data.

The price levels in Asia placed pressure on that in the US, sources said. On several occasions this month, state-owned China Petroleum and Chemical Corp., or Sinopec, slashed its offers in eastern China. Their most recent notice cut prices to Yuan 16,500/mt, or about $2,000/mt on an import parity basis.

Market participants have had mixed reactions to the announcements, although almost all have been expecting a fall.

“Significant but not really surprising,” said a trader. “Sentiment took a drastic turn after imports were fixed.”

A second trader was also surprised, he said.

“I was thinking butadiene would be lower, but it is a big number down,” he said.

Of all the producers involved in the contract price negotiations — ExxonMobil, LyondellBasell, TPC Group and Shell Chemicals — only LyondellBasell and TPC Group have yet to be heard nominating a price level, sources said.

“They will maybe settle at the same level,” the second trader said.

TPC Group does not comment on pricing, a spokeswoman said.

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

As butadiene spot prices moved lower on the month, they were heard to be using the March contract price as the price floor, sources have said. However, during the last assessment, the March contract price was heard to be the offer level. US spot import butadiene was assessed down 1 cents/lb on Friday to 109-110 cents/lb ($2,403-$2,425/mt) CIF USG. This came as pricing indications continued to move lower on the week.

The second trader said he was anticipating much of the same, saying “spot values should be falling quick.”

As the other companies nominate, the spot price could possibly follow down to around that same 93 cents/lb level, added a market participant.

(This version of the story fixes a misspelling in the headline.)

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