European butadiene buying interest for February loading material has climbed to $1,300/mt FOB Rotterdam on the back of firm demand for exports to the US, market sources said.
Reflecting this, Platts assessed butadiene at $1,287/mt FOB Rotterdam on Monday, an 11-week high and up $27/mt from Friday's assessed level of $1,260/mt.
With prices at 71 cents/lb or $1,565/mt CIF USGC and freight of approximately $250/mt, that would imply that arbitrageurs could break even at around $1,315/mt.
One European producer reported receiving Monday a "further bid at $1,300/mt FOB ARA from [the] same US buyer [as last week]."
Another producer also received bids for export to the US at the $1,300/mt level. In some cases buyers were looking to complete vessel space, the second producer said.
"[There's] some demand pull into the US for a couple of reasons. If you are importing you are talking higher contracts and spot prices. [But] you won't get that yet," the second producer said.
Traders also saw these levels in Europe. "Friday [I was] quite surprised at bids [from] US producers. Friday late [I] got confirmation of bids at $1,300/mt. If you load early February you end up in February or early March. US buyers are looking to February loading [cargoes]," a trader said.
The same source was surprised about US buyers' bullishness given that the US January butadiene contract had settled at an average of 56 cents/lb. However he said: "I would pay $1,300/mt... because there is firm demand right now for loading in February."
Trader sources said that the rise in demand was due to short covering interest in the event of production disruption when US cracker turnaround season starts in March.
Despite weak-to-stable demand, US prices had risen due to tightening supply, climbing to be assessed at an eight-month high of 66.50 cents/gallon CIF US Gulf coast for 3-30 day delivered material. This assessment was based on a January price of 62 cents/lb and a February price of 71 cents/lb. In the Asian market, spot CFR China parcels were assessed unchanged at $1,505/mt.
