US BD expected snug through September, but lacklustre demand persists

US butadiene (BD) production issues, which are expected to continue through September, offset overall sluggishness in derivative demand as automotive sector growth slows.

Tighter BD supply prevented any decline in US contract prices even as costs are relatively low and demand is slack.

The ICIS Contract Reference Price (CRP) rolled over at 40 cents/lb ($882/tonne) for September from August.

US BD Contracts (in cents/lb, separately issued)

All four producers separately nominated steady prices from their respective August settlements.

Supply tightened in early August when a 31 July fire at ExxonMobil’s Baytown, Texas olefins site interrupted production at the site’s steam crackers and chemical units.

One of the three crackers at ExxonMobil's site was affected as the fire was contained to a propylene-recovery unit associated with the cracker, market sources said.

While the cracker’s production capability was not affected, the handling of co-product streams was affected, sources said.

The olefins and chemicals units continue to run at reduced rates, an ExxonMobil spokesperson said on Thursday.

As feedstock crude C4 (CC4) production was impacted, the BD unit is not running - a situation that is expected to last through September, market sources have said.

October is expected to be more balanced.

While September contract prices are stable from August, spot BD volumes are being offered slightly higher than contract price levels for September.

Spot-buying appetite is muted in the domestic market, as buyers are largely covered on needed volumes.

Europe is balanced to snug as supply is tighter in the region, but not enough to offset naphtha’s decline, so September contracts settled lower.

A key European BD consumer has postponed its turnaround from August to September, keeping supply snug.

European spot material availability is limited, capping opportunities to export to Asia, which is snug.

Asia prices are at $1,250/tonne CFR (cost and freight) amid continued supply tightness and limited deep-sea spot availability.

Downtream synthetic rubber (SR) and acrylonitrile butadiene styrene (ABS) plants in Asia continue to run at reduced rates as slack demand prevails on a slumping automotive industry and slowing global economy.

BD is a key feedstock for synthetic rubbers, largely styrene butadiene rubber (SBR), which is used in tyre manufacturing. BD is extracted from crude C4s.

Major US BD producers include ExxonMobil, LyondellBasell, Shell Chemical and TPC Group.