Methylene chloride, chloroform prices may rise

03 June 2008 16:45  [Source: ICIS news]

LONDON (ICIS news)--Some European producers of methylene chloride and chloroform will target rises of €60-100/tonne ($94-155/tonne) in June due to higher transportation, feedstock and production costs, market sources said on Tuesday.

 

Following an announcement by INEOS last week that the company would be seeking a €100/tonne increase, another major producer of chloroform said it too would seek unspecified increases.

 

Two major methylene chloride players said they would target undisclosed increases in June following Dow, which announced late on Friday 30 May, it would seek price hikes of €60/tonne from 16 June. 

 

As well as increased costs across the board, producers also expressed the need to recover lost margins from the first-quarter when the methanol contract price increased €110/tonne.

 

One producer believed that, when comparing third quarter 2007 and first quarter 2008, methanol had increased in price by 225% whilst methylene chloride prices remained static.

 

A source at Dow said increases needed to be achieved as its “margins have been so heavily squeezed”, adding, “it is scary what we are facing”.

 

When asked about its customers reactions to the announcement, the source said it was too early to tell, although with other major producers announcing increases the source was hopeful it would achieve some kind of increase.

 

A trader conceded price hikes would now be likely during June as numerous producers were seeking increases. When asked whether buyers would seek alternative sources for material, the trader said there were no cheaper alternatives.

 

Buyers continued to reinforce their view that price increases were not justified when taking into account the current price of methanol and balanced market fundamentals.

 

($1 = €0.64)

 

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By: Sarah Trinder
+44 20 8652 3214

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