ERJ staff report (DS)
Houston, Texas -- Michael McDonnell, president and CEO of TPC, the Houston-based producer of butadiene monomer said, "we have seen an abrupt decline in demand for butadiene and synthetic rubber." Speaking at the company's third quarter results meeting, he added., "Tyre demand is weakening and tyre companies are working to reduce their inventories through year-end. In contrast to the tight supply constraint market conditions and the steep upward trend in pricing that we have seen over the past three quarters, we are now experiencing rapid and substantial declines in price."
Butadiene prices af around $0.95 per pound (spot pricing in North America), after falling from $1.71 in September to $1.40 in October, and $1.15 in November, said McDonnell. He said December pricing is expected to decline further as butadiene demand will likely remain weak for the rest of the year. However, TPC feels it is likely that the market will come back into balance in early 2012.
He said prices are likely to recover due to a number of planned outages and underlying strength in the global tyre market, combined with astructural shortages of butadiene due to feedstock issues and cracker technologies.
McDonnell continued, referring to the pattern of pricing during the very severe recession of 2009. Tthe average price in 2008, he said, was $0.84 per pound, which was a peak at that time, fell to $0.45 per pound in 2009 and then climbed back to an average of $0.84 per pound again in 2010. "So it didn't take long even then to recover."
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Press release (financial results) from TPC
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