US solvent price hikes falter on low demand

20 August 2008 19:52  [Source: ICIS news]

HOUSTON (ICIS news)--Decreased demand in the US and Latin American chlorinated solvent markets could deter further price hikes, a producer said on Wednesday.

Sellers noted that demand for perchloroethylene (perc), trichloroethylene (TCE) and methylene chloride has fallen since last year, leaving producers to further analyse future price initiatives.

“The situation is complex,” a producer said. “We need to implement price hikes but can’t because demand is down 10% in some markets since last year. We are currently analysing what to do because we don’t want to lose market share.”

Buyers and traders noted that supply was ample, and reports of 2 cent/lb (€30/tonne) decreases in spot trades were noted in the perc and TCE markets this week.

One buyer said perc spot prices dropped 2 cents/lb (€30/tonne) and attributed the decrease to falling crude and ethylene prices. A similar price decrease, reported in the TCE spot market, was attributed to ample inventory probably due to the sluggish US economy.

Meanwhile, sellers blamed the decline in demand on increased regulation and shifts in market trends.

“In methylene chloride we have seen a more efficient use of product and an increase in the use of recycled material,” a market insider said. “We also have seen pharmaceutical companies shifting business to Asia.”

A market participant said the decline in TCE and perc demand was due to increased regulation in the US and Europe.

“TCE has pressure in terms of emissions regulations and drycleaners in the US and Europe are using alternatives to perc,” the market participant said.

“We need to nominate price hikes but can’t, so, we aren’t planning any increases in the near future,” said a producer.

Perc prices are in the low 40s cents/lb FOB (free on board) USG (US Gulf), TCE prices are in the mid 50s cents/lb FOB USG, and methylene chloride prices are in the mid 40s cents/lb FOB USG, according to global chemical market intelligence service ICIS pricing.

Producers include Dow Chemical, INEOS, Occidental Chemical and PPG Industries.

($1 = €0.68)

For more on perchloroethylene visit ICIS chemical intelligence
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By: Leela Landress
+1 713 525 2653

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