BASF’s Elastogran cuts rates sharply at Antwerp MDI unit

02 December 2009 17:08  [Source: ICIS news]

LONDON (ICIS news)--BASF subsidiary Elastogran has started to make significant cuts in the output of methyl di-phenylene isocyanate (MDI) from its facility at Antwerp, Belgium, due to lower demand during the holiday period and market uncertainty in early 2010, a company source said on Wednesday.

“Due to the economic crisis, forecasting has gone from three months to one month or less and, due to the high amount of uncertainty about demand in early 2010, we are reacting to this by cutting back rates,” said the source, who would not disclose precise details about operating rates.

“It is a measure to control inventories during low season in the downstream construction industry,” the source added, referring to one of the main outlets for MDI.

However, the source pointed out that the uncertain demand outlook was the main reason for the significant reduction in operating rates, rather than the expected low season in the construction industry, which had been moderated to a certain extent in northwest Europe by recent mild weather conditions.

“We are currently ramping down operating rates and are likely to ramp up again in January. Due to sufficient stock levels, contracts will be covered during the period,” said the source.

Another supplier said it was normal practice for MDI producers to slightly reduce operating rates in the second half of December over the holiday period, but not to make significant cuts.

Sources said they did not expect any impact on supply in December due to the quieter holiday period.

One buyer said: “There is no demand at the moment. Supply is plentiful and it is more proof that too much material is available.”

This is despite Bayer MaterialScience’s idled plant at Brunsbuttel, Germany, and Borsodchem’s idled M1 unit at Kazincbarcika, Hungary.

However, MDI players said they would assess the situation in January, when participants would return to the market and were likely to restock.

One MDI supplier said that “BASF’s cutback would help to keep the market more balanced, similar to Bayer and Borsodchem’s [idled facilities]”.

Bayer MaterialScience and Borsodchem carried out their capacity reductions earlier in the year, in line with low demand amid the soft economic climate.

The nameplate capacity of Elastogran's MDI facility at Antwerp was rated at 560,000 tonnes/year, according to the ICIS plants and projects database.

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By: Heidi Finch
+44 20 8652 3214

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