Europe August MDI prices consolidate due to ongoing good market

04 August 2010 23:59  [Source: ICIS news]

LONDON (ICIS)--European methyl di-p-isocyanate (MDI) contract prices remained mainly steady in August, as bi-monthly agreements covering the holiday period were weighed against ongoing healthy market fundamentals, sources said on Wednesday.

"[It is] price consolidation for crude and pure MDI in August, following high increases in June-July and due to the summer holidays, but there is also bringing up of some laggards," said one MDI manufacturer.

Increases of €50-70/tonne ($66-92/tonne) were heard in a few cases, typically for those below the published range. However they were not seen to reflect the general market.

The European crude MDI range remained stable into August, with values between €1,700-1,770/tonne FD (free delivered) NWE (northwest Europe), according to ICIS.

European Pure MDI contract prices were assessed steady in August between €1,850-1,900/tonne FD NWE.

Prices either side of the range were also heard in a few cases, but they were not widely confirmed. A few customers reported prices below €1,700/tonne FD for crude MDI and below €1,850/tonne for pure MDI, but they were typically purchase prices rather than end-user levels or reflective of larger volumes.

By contrast, two sellers pegged the bottom of the crude MDI range higher, one at €1,750/tonne FD as a minimum and the other at €1,800/tonne FD. However, there was no buyer confirmation to substantiate this.

European MDI manufacturers were already focusing on September target hikes of €100-200/tonne on a take it or leave it basis.

The manufacturers said that supply was likely to tighten further amid a spate of plant maintenance such as for the largest European MDI unit in Antwerp, in Belgium, and expected stronger demand.

"It is an extremely dynamic market; demand is more than expected for construction, automotive and white goods/appliances. The market is running short of MDI, supported by turnarounds as well," said one MDI manufacturer.

A second MDI seller said it was likely that MDI availability would become shorter in the Autumn, particularly for crude MDI. This was due to expected increasing insulation demand, as well as numerous plant maintenances, particularly BASF’s MDI maintenance at Antwerp, Belgium, the largest MDI plant in Europe.

Some players said that an upward price tendency was likely in September due to limited supply. However, a few customers said that they were not prepared to commit to higher prices yet, stating that this would depend on supply/demand status quo in September.

Customers said they would also closely monitor the softening in benzene feedstock costs, which they said would provide MDI sellers with some margin improvement. Producers, however, considered the benzene downwards correction negligible in view of the feedstock increases earlier in the year, which were yet to be recovered.

($1 = €0.76)

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By: Heidi Finch
+44 20 8652 3214



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