29 December 2009 15:00 [Source: ICIS news]
By Mark Victory
LONDON (ICIS news)--European solvents will see a slow recovery in demand in 2010 amid higher prices than those seen in the previous year, sources across the product chain cautiously predicted.
Nevertheless, sources said that they could not predict the level of price increases as this was entirely dependent on the evolution of feedstock costs, which were expected to go up.
Improving macro-economic conditions were expected to lead to increased solvents consumption in 2010, but again sources added the caveat that true demand levels were difficult to foresee.
“The next six months remain critical. Until we see how demand develops in the traditionally healthy second quarter period it is hard to know how 2010 will perform,” an ethyl acetate (etac) and butyl acetate (butac) buyer said.
“Putting together forecasts is still a tricky business, but flat to low single digit growth is what we are expecting for 2010,” added an etac and butac producer.
Demand in January 2010 was expected to be particularly strong as buyers restocked, sources in the etac, butac, glycol ethers, and MEK markets confirmed.
“I think January 2010 should be better than January 2009, but we are entering the next year with cautious optimism as we still do not truly know what will happen,” a key etac and butac distributor said.
Producers of glycol ethers, butac and etac were targeting increases of up to €50/tonne ($72/tonne) in January, while MEK producers were targeting January cost increases of up to €30/tonne, when January contracts settled.
“Everyone is running their stocks down as low as possible before the end of the year, so January could well see a resurge in demand as customers look to restock. If this is the case then they [the producers] would have a greater chance to pass through increases,” a trader said.
Although most solvents markets expected improvements in demand and price next year, the key exception was the IPA market, where technical grade prices have been falling throughout the fourth quarter of 2009 due to weak demand.
“When we go into January I don’t see any change. I don’t see any real change until real demand returns, and it’s hard to say when that will be. There aren’t a lot of markets left out there,” an IPA producer said.
($1 = €0.70)
Jane Massingham and Stuart Moir contributed to this article
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