Europe Feb flexible polyols up on costs, balanced-to-tight supply

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

LONDON (ICIS)--European flexible polyols contract prices have increased in February, driven by record high feedstock costs, good demand and balanced-to-tight supply, market players said on Wednesday.

“If you want material, then you need to pay it (the higher price),” said one customer.

There was some variation about the magnitude of increase in February, depending on source and, in some cases, taking into account any increments already implemented in January.

Manufacturers said they had secured hikes of €100-150/tonne ($137-205/tonne) for February or, in some cases, for January and February combined. However, customers confirmed increases between €30-120/tonne, depending on starting point and previous increases.

Flexible polyols contract prices were assessed in February between €1,750-1,800/tonne FD (free delivered) northwest Europe (NWE). This represented increases of €50-80/tonne from January. Some sellers reported prices at up to €1,850/tonne FD but there was insufficient market confirmation to substantiate this.

For rigid polyols, February settlements ranged between rollovers to increases of €50/tonne, as higher feedstock costs were weighed against low season demand from the main downstream construction sector, as well as quarterly contracts, for which prices were fixed until the end of the first quarter.

Rigid polyols contract prices were assessed in February between €1,800-1,850/tonne FD NWE. This represented an increase of €50/tonne for low-end business, but a rollover at the upper part of the range.

Higher numbers were also heard from the sell side, with one supplier saying it was selling rigid polyols in February with a premium of €100/tonne over its flexible counterpart, which it valued between €1,750-1,850/tonne FD. However, there was insufficient market confirmation to substantiate the higher level.

Looking ahead, players were also expecting further increases based on the underlying cost pressure and upcoming plant maintenances over the next few months. Sources said that there would be more acceptance of price increases for rigid polyols across the board in March or in the second quarter, particularly with the expected seasonal uptick from the downstream construction sector.

Forthcoming plant maintenances included one main polyols facility in northwest Europe which was due to start in the second quarter for approximately five weeks, according to a company source. Capacity details were not disclosed.

There was some market speculation that Shell Chemicals’ polyols plant at Pernis in the Netherlands was also due to enter into a planned maintenance in the second quarter for around five weeks. However, the company had declined to comment on this. The nameplate capacity for polyols at the site was 255,000 tonnes/year, according to the Shell website.

Novacke Chemicke Zavody’s polyols facility in Slovakia was due to undergo a brief maintenance stop in April, a company source said. The company had previously stated the total nameplate capacity for polyols at the site was 13,000 tonnes/year.

($1 = €0.73)

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By: Heidi Finch
+44 20 8652 3214

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