Europe January TDI rises €80/t, MDI stable

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

LONDON (ICIS news)--European toluene di-isocyanate (TDI) January contract prices were concluded at an average increase of €80/tonne ($119/tonne), based on tight supply and good demand, buyers and sellers said on Wednesday.

 

A new TDI price range was established at €2,755-2,905/tonne FD (free delivered) W Europe (west Europe) by global chemical market intelligence service ICIS pricing.

 

TDI settlements had been made at increases of between €50-150/tonne, with plus €80/tonne deemed a representative average.

 

A number of sellers said they had agreed hikes with buyers of up to €200/tonne, in many cases divided equally between January and February.

 

One major producer acknowledged price increases of this magnitude were unprecedented but said that buyers’ priority was to secure volumes at a time of reduced availability.

 

The tightness of material and hence the increases were accredited to plant outages in late 2007 and peak seasonal production during the same period as end-use buyers prepared for strong furniture demand in the first quarter of 2008.

 

Crude and pure methyl di-p-phenylene isocyanate (MDI) numbers were more stable, meanwhile, with prices assessed down €10/tonne at the low end for crude MDI and unchanged for pure material. This resulted in January price ranges of €1,830-1,940/tonne FD W Europe for crude MDI and €1,895-2,040/tonne FD W Europe for pure MDI.

 

The overwhelming majority of crude MDI settlements were reported at a rollover but one large buyer said it had agreed a €50/tonne decrease for a single January contract, based on a well-supplied market and a weak construction sector.  In addition, a major UK buyer reported that it had agreed a quarterly contract at minus €70/tonne, based on a quiet market and good availability.

 

While these agreements were not deemed representative of the market, the prevailing bearish sentiment was reflected in the €10/tonne fall in the assessed price range.

 

Sources described the crude MDI market as stable and in the midst of a seasonal downturn, due to cold weather impacting on activity in the construction sector.

 

There was some market talk of possible price cuts in February but a trader observed the combination of planned production outages in the first quarter and stronger demand in the second quarter would inevitably tighten supply.

 

In the Middle East and Africa, there were varying reports on spot prices, with one player suggesting they were close to $5,000/tonne CFR (cost and freight), while another said ex-Asia material was now available at $4,150-4,500/tonne CFR.

 

European TDI producers include Bayer, Borsodchem, Elastogran, Lyondell, Shell, and Zachem. Elastogran, BorsodChem and Bayer also manufacture MDI.

 

($1= €0.67)

By: Samuel Weatherlake
+44 20 8652 3214

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