Europe Jan flexible polyols up €50/t, rigid up €20/t

09 January 2008 23:59  [Source: ICIS news]

LONDON (ICIS news)--January flexible polyol contracts were increased by an average of €50/tonne ($74/tonne), while rigid polyols were up €20/tonne on the high end of the December range on strong demand and feedstock values, European buyers and sellers said on Wednesday.

January contract prices for flexible slabstock conventional polyols were assessed at €1,600-1,710/tonne FD (free delivered) NWE (northwest Europe) by global chemical market intelligence service ICIS pricing.

Base rigid sucrose polyols prices were assessed in a new range of €1,640-1,760/tonne FD NWE, although most contracts were agreed on a quarterly rather than a monthly basis.

Actual settlements varied considerably, with increases of between €30-80/tonne being reported for flexible polyols contracts.

One major producer who achieved plus €80/tonne said it had encountered strong resistance, but explained that its price initiative had been aided by good demand and a tightening market.

Other sellers drew attention to the tight glycerine market and the rising cost of propylene, which impacted directly on propylene oxide (PO) prices.

Buyers contended that availability remained good, with one suggesting that sellers did not expect to be able to raise prices again this year, and might even face price erosion.

However, a major seller which raised its January prices by €40-60/tonne said it planned to achieve the remainder of its plus-€100/tonne target in February.

The source said it was no longer a question of supply and demand, but a need to maintain viable operating margins.

In contrast, a buyer suggested that price erosion could be seen as early as next month, based on good supply.

Many sellers had originally targeted price increases in the region of €100/tonne.

Price trends were less clear on rigid polyols, with more quarterly accounts, and some negotiations for longer-term contracts having been postponed.

A major producer reported achieving average January increases of €20-30/tonne, saying this was acceptable for the present.

The source added that cold weather in Europe had reduced demand from the construction sector, resulting in a quiet and stable market..

One quarterly buyer said it had accepted hikes of €40-50/tonne, having initially hoped for a rollover, while another had agreed to stable prices from the fourth quarter.

The only decrease was reported by a reseller, which said it had achieved a price cut of €20/tonne for the first quarter.

Sources explained that rigid polyols were under the same cost pressures as flexible polyols, but had not experienced the same level of price erosion during 2007.

The market for both products was described as weak over the holiday season, but sources said activity was now on the increase again.

European polyols producers include Bayer, Dow Chemical, Elastogran and Huntsman.

($1 = €0.68)

By: Samuel Weatherlake
+44 20 8652 3214

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