US September butadiene contract closes 2.50 cents/lb higher on the month

The September butadiene contract price for the US settled at 50.50 cents/lb, up 2.50 cents/lb from August.

The settlement took into consideration the nominations from all four major butadiene producers in the US and applied a simple average to the values.

Overall, producers' nominations for the month were higher, with adjustements ranging from plus 1 to plus 4 cents/lb, compared to the August nominations.

The nominations were initially met with skepticism by the market, particularly as one producer initially nominated at a 4 cents/lb increase from August.

"That is crazy high, and the other producers won't support it," said a buyer source at the time, with other trader and buyer participants separately echoing the sentiment.

Those expectations were later proven wrong, as the other producers' nominations came higher on the month, albeit not at the 4 cents/lb increase.

Those initial significant increases proved consistent with both the European settlement and a clearer arbitrage to Asia. Europe's September contract price levels closed at €1,135/metric ton, a €50/mt increase from August. Overseas negotiations ran longer than usual, as producers cited river-related transport and production challenges to justify the increase, while buyers argued that ongoing weak demand did not support the move.

Arbitrages from the US to Asia also showed clearer export opportunities. Though a trader source pointed out that recent high freight costs make it difficult to truly ascertain the netback opportunity to US producers, Platts last assessed CFR Northeast Asia prices at $1,510/mt, a $230/mt increase from the start of August.

Several export vessels have been heard to be fixed by US traders to Asia, all for August/September loading, with at least 16,500 mt of material set to sail overseas in the coming weeks.

Platts is part of S&P Global Energy.