During August through October of 2016, three major US butadiene producers began to restructure contract prices and eliminate the practice of posting only a base contract price and then adding a confidential surcharge to yield a net transaction price. It is our understanding that the four major US producers will maintain their practice of nominating their contract prices for the next month before the end of the current month.
After consulting with the customers, they will have the option to revise and finalize their initial nominations. Contract buyers have consistently advised that they want to establish a competitive and transparent contract price. US butadiene producers have acknowledged that market conditions will evolve in coming years, with butadiene supply expanding thanks to new ethane-based ethylene crackers in the US.
The new Argus assessment positions the market for these changes right now.