The May US butadiene contract price received an initial nomination from Shell Chemicals for a 20 cents/lb reduction, market sources said on Friday, following a second month of global price drops.
This price cut would settle the May US butadiene contract price at 73 cents/lb ($1,609.36/mt), sources said.
Sources have been anticipating a price decline in butadiene contracts for May after another month of substantial falls in Asia and the US.
"Supply is longer and the price is going to fall pretty severely in May," a trader source said last week before the announcement.
Since reaching a 2017 peak of $3,070/mt on February 3, the CFR China marker has lost 58.46% using the most recent assessment, according to S&P Global Platts data. The US market reached a 2017 peak of 132.50 cents/lb on February 24 and has lost 39.62% since that time, according to Platts data.
While the majority of the movement in the US has been driven by price cuts in Asia, sources have said improving US butadiene supply is also a factor.
"The US butadiene supply is improving from a tight situation into a lengthy balance," another trader source said.
Talk earlier in the month suggested 80 cents/lb potentially being the target level for May contracts, but with recent trends, sources said a larger decrease could be warranted, with multiple market participants pointing to a potential level of 70 cents/lb.
Of all the producers involved in the contract price negotiations -- ExxonMobil, LyondellBasell, TPC Group and Shell Chemicals -- only Shell Chemicals has been heard to have nominated a price level, sources said.
Requests for comments and/or confirmation were not immediately returned by the other three producing companies.
As butadiene spot prices moved lower month on month, they were heard to be valued at the April contract level, sources said. As the month continued, spot offers moved below the April contract price, sources said.
"If you wanted to sell now, you would have to look at contract price with a discount for pricing," the first trader source said last week.
"We did receive several spot butadiene offers for May delivery," a buyer source said, adding that "no fixed price offer is available or wanted. Most offers follow May CP."
US spot import butadiene was assessed at 79.50-80.50 cents/lb ($1,753-$1,775/mt) CIF USG, down 13 cents/lb ($287/mt) from last Friday.
