12 November 2008 23:06 [Source: ICIS news]
HOUSTON (ICIS news)--Buyers and sellers were heading back to the negotiating tables as isocyanate and polyol prices held steady despite falling feedstock values and anaemic demand, market participants said on Wednesday.
“We are in the midst of talks and we expect to see producers come off their prices, but they are hanging on by their finger nails until the end of the year,” a large buyer said.
Polyol slab stock was assessed at 134.5-142.5 cents/lb and polyether polyol assessed at 147.5-155.5 cents/lb, according to ICIS pricing.
Demand destruction was cited by many buyers who were worried by faltering downstream and end-use demand.
“We’ve seen our sales drop 30 to 40% and we are getting no relief,” a large polyol and isocyanate buyer said.
Buyers and traders speculated that prices would come down early in 2009.
“Producers are going to hang on until the end of the year and we’ll probably see prices drop in the first quarter,” a trader said.
While buyers have lamented the current prices, producers have said they are still trying to recover from the earlier run-up in energy prices and voiced concern over the volatility of energy markets.
“The short term has been so volatile that it is unclear as to where energy prices will go,” a producer said.
On Wednesday, the US Department of Energy (DOE) slashed its 2009 projected crude oil price to $63.50/bbl, down nearly 50% from last month’s projection of $112, the agency said.
Price projections from the DOE’s Energy Information Administration (EIA), which assume no major crude oil supply disruptions, have plummeted due to worldwide economic stagnation.
Crude oil prices reached an all-time record high of $147.27/bbl in early July. They have since crashed more than 60% as the world faces a global economic meltdown.
Despite OPEC’s early November production cuts, the health of the world’s economy will determine the market price, the EIA said, suggesting that the cuts may limit, but not reverse, the recent drop in prices.
US isocyanate producers include Huntsman, Bayer, BASF and Dow Chemical.
($1 = €0.80)
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