23 December 2008 21:56 [Source: ICIS news]
HOUSTON (ICIS news)--US toluene di-isocyanate (TDI) prices were the main factor driving foam costs and hampering its competitiveness, automotive suppliers said on Tuesday.
“Suppliers are having to go back to their raw material suppliers to get lower prices because they just aren’t competitive,” an automotive industry source said. “Millions of dollars in orders are in play, and the long-standing relationships aren’t closing deals any longer.”
According to industry players, TDI is the main price driver of polyurethane (PU) foam because it has been historically tight in the US market, with the highest average prices worldwide.
The US TDI bulk prices were in a range of $4,321-4,475/tonne (€3,111-3,222/tonne), according to data from global chemical market intelligence service ICIS pricing.
One buyer speculated that prices were headed down starting in October, but the lingering tightness after the hurricanes helped maintain values.
“Asian and European prices are back around early 2008 prices, and the US prices were headed that direction too, but the hurricanes helped maintain prices,” the buyer said.
The expected deterioration of US TDI values was likely foreshadowed by large decreases in Asian and European TDI prices in the fourth quarter of 2008, sources said.
The Asian TDI spot prices started a rapid decline on 1 October on soft demand. Asia’s downstream PU demand was expected to weaken significantly during the fourth quarter with key PU end-users such as furniture, bedding, garment and refrigerator manufacturers likely to see a fall in their exports to the US and Europe, the secretary-general of the China Polyurethane Industry Association, Dr Zhang Jie, said in October.
In Europe, the TDI market was in freefall during the week ended 10 December due to a lack of demand and de-stocking, market sources said. Market participants described the price drops as astronomical and sliding on a daily basis.
Buyers and traders speculated that another deterrent to TDI price deterioration was the US reluctance of importing drums of the chemical.
An industry analyst said that the US deals in bulk shipments, but that much of the world also uses drums of TDI.
“The chemical is dangerous, and the US workers can’t handle the drums like we do here in Latin America,” a Latin American trader said in Spanish. “So, [US workers] can’t easily import, and prices remain high.”
Major US TDI producers include Dow Chemical, LyondellBasell, BASF and Bayer.
($1 = €0.72)
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