Automotive slump puts skids under Europe TDI

09 October 2008 11:52  [Source: ICIS news]

LONDON (ICIS news)--Recent production cuts by car makers Opel and BMW in Germany will have a negative impact on Europe’s toluene di-isocyanate (TDI) industry, a regional trader said on Thursday.


“Opel declared an extra two weeks of holiday in two of its German factories and BMW closed one of its factories for an extra week. This will reduce the amount of toluene di-isocyanate business in Germany,” the source said.


Customers were increasingly uncertain about the future of the whole European isocyanates market, he said.


“Euro 2008 was good for business but now buyers will be sitting on their hands waiting to see the true negative impact of the current banking crisis,” the source added.


There were growing pressures in the methyl-di-p-pheylene isocyanate (MDI) market as producers were facing enormous losses as a result of rising energy costs and high levels of investment, the trader said.


Due to the economic downturn, shares in the German automotive market - a large consumer of chemicals - had dropped by up to 40% and wealthy Russian and Chinese firms would be looking to buy into it on the cheap and maximise profits, he added.


“This could be a danger to the industry,” he said.


Opel and BMW announced the production cuts earlier this week following a fall-off in demand triggered by the global economic crisis.


The main outlet for TDI is in the manufacture of polyurethane (PU) flexible foams used in upholstery, mattresses and car seats. It is also used in coatings and elastomers.


To discuss how the financial crisis is affecting the chemicals industry visit this thread on ICIS connect   

By: Stuart Moir
+44 20 8652 3214

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