June US butadiene contract prices are expected to roll over or possibly fall slightly compared with May contract prices as spot levels have dropped throughout May, sources said Wednesday.
Many sources expect a rollover in contract pricing as supply is still tight and spot prices have only fallen slowly, but several said there could be a drop of as much as 3 cents in June CPs as further spot weakness is expected.
The May US butadiene contract price settled at a 68-78 cents/lb ($1,499-$1,720/mt) split settlement, sources said. The settlement is void of any discounts or adders that producers might include, sources said.
US spot butadiene prices have been trending lower since peaking at an assessment of 80 cents/lb CIF US Gulf Coast at the end of April, with the price dropping to an assessment at 73.50 cents/lb CIF USG May 15. Spot pricing was pegged in the low 70s cents/lb CIF USG Wednesday.
Spot prices rose at the start of 2014 due to supply tightness and continued higher in April due to production issues along the US Gulf Coast, which have since been resolved, sources said.
Along with the production issues being resolved, as much as 40,000 mt of butadiene arrived from Asia in March, April and May and another 10,000-15,000 mt is expected to arrive in the US in June. That additional supply is part of the reason, spot prices are expected to continue dropping.
If the butadiene contract price falls in June, it would mark the first decrease in contract prices since August 2013 when contracts plummeted 26 cents to a 40-47 cents/lb split settlement, according to Platts data. US contracts have been stable since March.
