FocusFurniture sector boosts Europe TDI, flexible polyols demand

24 November 2009 17:22  [Source: ICIS news]

LONDON (ICIS news)--The European furniture sector, one of the main outlets for upstream toluene di-isocyanate (TDI) and flexible polyols, is weathering the economic storm well, with demand in November 2009 exceeding expectations in central and eastern Europe, market players said on Tuesday.

“[For furniture sales] it has been the best month this year,” said one TDI customer in central and eastern Europe. “Recovery is very fast and we are getting close to 2007 levels [pre-economic crisis].” 

One flexible polyols producer said: “Monthly sales [for furniture applications] from June-November 2009 have been higher than expected in central and eastern Europe.”

Producers said the region had underlying growth potential due to investments in new furniture plant capacities.

“It is a faster recovery [for the upholstery sector] than for other sectors,” said one TDI producer, who noted that “there has been a shift in purchasing behaviour [amid the softer economic climate] from buying new cars to buying lower-budget items such as furniture and bedding. Refurbishment is more of a priority. There has been a substitution effect among certain consumer goods.”

One polyurethanes supplier said the strong November was making up for a slow start to the year: “The furniture season was a slow starter this year. It normally starts in June, but did not start until later, which has resulted in a delayed season.”

In northwest Europe, consumption was also holding up reasonably well, but not to the same extent as in the central and eastern European regions, due to less underlying growth potential in the mature northwest European furniture market. Some sources estimated that sales were still in negative territory, down on average by 5-10% from pre-crisis levels. Few signs of seasonal slowdown were apparent in November, according to a number of players.

“The market is relatively steady. There were big promotions in early 2009 [due to the soft economic climate] and we have reaped the benefits in the second half of 2009,” said one player in the furniture sector in northwest Europe.

With regards to December, players said it was still too early to have a clear idea about demand. Some sources expected consumption in the first half of the month to be reasonably good, preparing deliveries for early January. However, a seasonal tailing off in demand was anticipated for the second half of December due to plant closures over the holiday period. 

European TDI contract prices had increased by up to €100/tonne ($149/tonne) in November to €2,100-2,250/tonne FD (free delivered) NWE (northwest Europe), according to global chemical market intelligence service ICIS pricing. This was driven by tight supply resulting from a series of production issues in Europe and the US, along with buoyant downstream demand.

European flexible polyols contract prices moved up by €30-40/tonne in November, taking values to €1,420-1,480/tonne FD NWE. This was attributed to upstream propylene oxide (PO) supply constraints, production issues and a good level of consumption.

Looking to December, polyurethane prices were expected to remain stable due to the combination of bi-monthly contracts valid for November-December and the holiday absences.

Polyols producers, however, were keeping an eye on upstream propylene developments and did not rule out the possibility of a possible increase in December, if there were to be a significant hike in propylene costs.

($1 = €0.67)

For more on TDI and polyols visit ICIS chemical intelligence
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By: Heidi Finch
+44 20 8652 3214

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