Europe Feb TDI prices largely firm on higher upstream costs

09 February 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices have largely firmed in February, driven by mounting cost pressure and the urgent need to recover lost margins, market players said on Wednesday.

Rollovers were also heard from some buyers, who said that higher costs were weighed against sufficient supply. Manufacturers largely contested this, although one producer was aware of some rollovers available in the market.

“The increases [for TDI in February] are driven by costs," one customer said. "The rising toluene [feedstock] cost and recent drop [in TDI prices] have become a problem and they have put a stop to it.”

One TDI manufacturer said: “It is a turning point in February, we are not satisfied with the increase, it is only marginally covering the cost-increase, but after months of dropping prices, they are now moving upwards. It is symbolic.”

Producers said they had secured hikes of €20-90/tonne ($27-123/tonne) in February, although buyers reported a mix of rollovers to increases of €20-50/tonne, with average rises pegged between €20-30/tonne.

TDI contract prices in February were assessed between €1,940-1,990/tonne FD (free delivered) NWE (northwest Europe). This represented an increase of €20-30/tonne from January. Rollovers were largely incorporated within the range.

Numbers either side of the spread were also heard in a few cases, but there was insufficient market confirmation to substantiate this.

Demand was reasonable-to-good, depending on source. Supply was generally sufficient, although sellers suggested a tightening tendency on the back of healthy demand and a spate of planned and unplanned outages.

Looking to March, producers were already gearing up for further increases, based on the ongoing need to restore profitability.

One seller stressed that it would need to recover at least €200/tonne in total by the end of the first quarter, in order to recoup the losses incurred since December 2010.

Buying sources were also aware that the cost pressure, along with plant maintenances for a number of players in the next few months, could give rise to increases for TDI in March.

However, one customer was also mindful that it could be a limited window, given the new TDI capacity, expected onstream in Europe by mid this year.

Borsodchem’s 90,000 tonne/year TDI plant 1 at Kazincbarcika, in Hungary, was expected to undergo routine maintenance in the second half of February for approximately one week. The company’s TDI unit 2 was scheduled to come onstream by mid 2011, with a gradual ramp-up expected during the second part of the year.

Perstorp’s TDI facility at Pont-de-Claix, in France was likely to go down for planned maintenance at the end of the first quarter for approximately one week.

The company has recently lifted the force majeure (FM) on its TDI supplies at the site, after resuming normal operating rates, although stocks remained low. The nameplate capacity for TDI at the site was pegged at 126,000 tonnes/year, according to Perstorp.

There was also market speculation that BASF’s 80,000 tonne/year TDI facility at Schwarzheide, in Germany was likely to enter into a maintenance turnaround in the next few months. However, the company was unavailabe for comment.

($1 = €0.73)

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By: Heidi Finch
+44 20 8652 3214

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