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Butadiene Price Assessment: Petrochemicals Price Assessments

Butadiene price assessments explained

Platts butadiene assessments are based on the price of physical butadiene cargoes, barges globally, and rail-tank cars or trucks specifically in Europe. We publish Butadiene barge price assessments in Europe, China, South East Asia, South Korea, Taiwan, and the US.

Butadiene is a gas chemical and is extracted from one of a key of the cracker co-product olefins, crude C4 and used in the production of elastomers and co-polymer plastics, such as polybutadiene rubber, styrene-butadiene rubber, nitrile rubber, styrene butadiene latex.

It is a toxic gas, and so thus both dangerous and expensive to move. It is also temperature sensitive and the product must be moved carefully in temperature controlled containers in order to keep it on-spec. If it goes off-spec, it might start to solidify.

How we assess the price of butadiene

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Platts butadiene price assessments are based on robust and transparent market data that includes, but is not limited to, firm bids and offers, expressions of interest to trade and confirmed trades of styrene reported during the Market On Close process every day.

We assess butadiene globally with a minimum purity of 99.5% with a dimer content should be a maximum of 1,000 ppm.

The US spot butadiene assessment is a weekly assessment, loading 3-30 forward from the date of publication. It trades on a CIF US Gulf Coast in cents/lb. Imports of 2,000-4,000mt are considered for spot assessments.

Volumes smaller than 2,000mt may be considered as indicators to derive an assessment. We also publish a monthly contract price in cents/lb, reflecting negotiated prices for contractual volumes for a particular month, and are assessed basis FOB US Gulf Coast.

Platts US domestic butadiene contract prices represent posted prices settled before discounts. Monthly contract settlement of the four producers who nominate and settle contracts in the US.

The contracts are assessed on an FOB USG basis and represent the posted prices before discounts or adders. The four producers -- ExxonMobil, LyondellBasell, Shell Chemical and TPC Group -- typically nominate contracts for the next month starting 10 days out from the end of the prior month.

The contract is usually settled by the end of the month. In Asia, we assess FOB Korea and CFR China daily at 16:30 pm Singapore time. CFR Taiwan and CFR Southeast Asia are weekly assessments.

Our assessments are of Butadiene cargoes of volumes ranging between 1,000 and 5,000 mt in the continent loaded (FOB) or delivered (CFR) 20-40 days forward from date of publication. FOB Korea, CFR Taiwan, CFR South East Asia, FOB Japan and CFR China are assessed up to 30 days.

For deals with usance of greater than 30 days, the value of the extra credit allowance will be factored out for price assessment, based on prevailing interest rates calculated using the 3 month London Interbank Offered Rate (LIBOR) + 1.5%.

In Europe, we assess 3-30 day spot free delivered FD (distribution) in Eur/mt; spot (bulk) FOB Rotterdam in $/mt; and a monthly contract price FD NWE in Euro/mt. For bulk assessments in Europe, only cargoes of at least 1,000mt will be taken into account.

For distribution assessments (FD), truck/rail car deals of at least 100mt will be taken into account. We also publishes an NWE FD NWE monthly contract price in Eur/mt, reflecting negotiated prices for contractual volumes for a particular month.

Our European domestic butadiene contract prices represent posted prices settled before discounts.

The principle monthly contract price settlers are producers: Total Petrochemicals, SABIC Europe, LyondellBasell, Evonik, BASF, Shell Chemicals; consumers: Solvay, Michelin, Lanxess, Styron, Synthomer

Evolution of butadiene

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The US assessment was started on April 25, 1985 as a weekly and has been a weekly since that time, done on Fridays.

The US is a net importer of butadiene, but if there is no import business, then the assessment could use either domestic or export business to determine an import parity price.

In recent years, the assessment has seen record high pricing, with the all-time high assessed at 225 cents/lb CIF USG on July 1, 2011.

In Asia the Platts assessments began in January 5, 1990 with the FOB Korea and CFR SEA markers.

On July 6 Platts began assessing both the FOB Korea, China domestic (ex tank) and CFR China markers as daily prices with CFR SEA still assessed as a weekly. China is the main importer of butadiene in Asia and imports anywhere between 25,000-55,000 mt of the product on a monthly basis.

These cargoes come primarily from Japan, South Korea, Malaysia, Thailand, Singapore and India. Sporadic volumes come in from the USA and Europe. Smaller volumes are sold into Taiwan and even smaller in Southeast Asia.

Cargoes are delivered at main ports of Nantong, Tianjin, Dalian, Shanghai, Ningbo and Guangzhou are considered for CFR China assessment. Cargoes loading from ports of Daesan, Ulsan and Yeochon are considered for FOB Korea assessments.

Cargoes delivered at the ports of Mai Liao and Kaohsiung in Taiwan are used for CFR Taiwan assessments. For CFR Southeast assessment, the prime ports are Merak in Indonesia, Ma Ta Phut, and Rayong in Thailand and Penang in Malaysia.

The origin or destination of cargoes should however not be restricted to specific ports for them to be considered for our assessments. China’s annual butadiene demand is about 2.36 million mt while that of Asia is about 6.11 million mt.

China accounts for about 40% of total Asian butadiene demand. In Europe, Platts began assessing butadiene the FOB Rotterdam marker as a weekly price on March 4 1985, with the domestic FD NWE assessment started on January 6 1994. Both basis, in line with Asian assessments, later became daily assessments from July 6 2012.

Europe is a net exporter and along with domestic contractual volumes exports to both the US and Asia. Rotterdam is the principle hub but material can be loaded out of Antwerp also.

Most of the European exports into the US are shipped to the USGC hub, whilst exports to Asia are typically exported to CFR China mainport.

How to access the price of butadiene

The Butadiene Price Assessments are available in the following Platts services:

Market Data -- Petrochemicals Prices

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Platts Olefinscan

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