LONDON ,June 29-European butadiene (BD) third quarter settlements have been agreed up by ?05/tonne at ?,480/tonne ($1,827/tonne), contract parties said on Tuesday.
A sizeable increase over the second quarter contract of ?,275/tonne FD (free delivered) NWE (northwest Europe) was widely anticipated based on forex changes, feedstock gains and a desire to close the gap between European levels and those in the US.
The wide open arbitrage window had meant that export demand had been very strong throughout the second quarter and had kept European supply tight and spot numbers high.
"My original number was ?,500/tonne, with ?,480/tonne we still have an open arbitrage to the US which means the [European] market will remain balanced-to-tight," one of the initial settling producers said.
Another supplier said: "We projected in the low ?,500s/tonne particularly because of the arb, we are not doing ourselves a favour leaving a wide open arb".
Spot prices had risen to ?,700/tonne FD and above on the domestic market and $2,150/tonne FOB (free on board) on the export market, according to ICIS, because of the strong pull from the US.
The first agreements were done late on Monday and were between a large butadiene consumer and two of its suppliers.
Two other major consumers and another supplier were reported to have followed the settlement, while confirmation from one of the key consumers and one of the suppliers was still pending.
($1= ?.81)
A sizeable increase over the second quarter contract of ?,275/tonne FD (free delivered) NWE (northwest Europe) was widely anticipated based on forex changes, feedstock gains and a desire to close the gap between European levels and those in the US.
The wide open arbitrage window had meant that export demand had been very strong throughout the second quarter and had kept European supply tight and spot numbers high.
"My original number was ?,500/tonne, with ?,480/tonne we still have an open arbitrage to the US which means the [European] market will remain balanced-to-tight," one of the initial settling producers said.
Another supplier said: "We projected in the low ?,500s/tonne particularly because of the arb, we are not doing ourselves a favour leaving a wide open arb".
Spot prices had risen to ?,700/tonne FD and above on the domestic market and $2,150/tonne FOB (free on board) on the export market, according to ICIS, because of the strong pull from the US.
The first agreements were done late on Monday and were between a large butadiene consumer and two of its suppliers.
Two other major consumers and another supplier were reported to have followed the settlement, while confirmation from one of the key consumers and one of the suppliers was still pending.
($1= ?.81)
