Europe pure MDI prices rise in March on short supply, feedstocks

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

LONDON (ICIS)--European pure methyl di-p-phenylene isocyanate (MDI) prices largely increased in March, driven by feedstock pressure and short supply, but crude MDI prices were mainly stable due to quarterly contract constraints, said market players on Wednesday.

MDI manufacturers had said there is an underlying need to increase prices by €250/tonne ($347/tonne) at the earliest opportunity or at the latest by 1 April, depending on contract type.

This was driven by recent spikes in energy and benzene feedstock costs, which have not yet been recovered.

For MDI, success in implementation of the increases in March varied, depending on grade.

On top of feedstock pressure, price increases for pure MDI had been more widely accepted in March due to the monthly nature of accounts, as well as seasonally high demand, particularly due to the downstream footwear sector and restricted supply.

Restricted supply was attributed to recent production problems, as well as a spate of MDI plant outages, sources said.

Pure MDI prices were largely confirmed in March between €2,000-2,100/tonne FD (free delivered) NWE (northwest Europe), according to ICIS.

This represented increases of €50-75/tonne from the previous month. Larger hikes of up to €250/tonne were heard in the market, but they were not widely confirmed.

By contrast, sellers attempts’ to raise prices for crude MDI across the board in March were largely thwarted by the large proportion of quarterly accounts, where prices remained fixed until the second quarter.

For monthly crude MDI contracts, which remained limited in number, sellers reported rollovers-to-increases of €30-200/tonne in March, depending on source and starting point. They pegged crude MDI prices between €1,850-1,900/tonne FD as a minimum, reporting numbers up to €2,000/tonne.

Monthly crude MDI customers confirmed mainly rollovers in price in northwest Europe for March, with increases of around €100/tonne, taking prices to €2,000/tonne FD, restricted to the Mediterranean region.

The crude MDI range for NWE remains steady between €1,800-1,950/tonne FD NWE in March, in line with the majority of quarterly accounts.

Crude MDI demand was generally good-to-improving, in line with the onset of peak season in the construction sector. However, there was some variation, with customers pinpointing subdued activity in parts of the Mediterranean, the UK and Ireland, which was linked to economic constraints.

Crude MDI supply was deemed sufficient, although sellers expect that the market could tighten in the second quarter, with the seasonal uptake in demand, coinciding with a strong concentration of plant maintenances.

Maintenance plans have also been altered in some cases. BASF’s 560,000 tonne/year MDI facility at Antwerp, in Belgium, is scheduled to go down for planned maintenance at the end of March. A company source said the turnaround is expected to last for approximately ten days.

The source added that the same unit is also likely to undergo another maintenance stop in the second quarter, although precise dates and duration were not disclosed.

Also at the end of the first quarter/beginning of the second quarter, Huntsman’s 280,000 tonne/year MDI unit at Rozenburg, in the Netherlands is due to enter into a planned maintenance turnaround. This is expected to take approximately four weeks in duration, said a company source, adding that the smaller 120,000 tonne/year MDI facility at the site will operate normally during this outage period.

At the beginning of the second quarter, maintenance is also scheduled to start at another company’s main MDI facility in northwest Europe, which is expected to last for a few weeks. Further details are unavailable.

($1 = €0.72)

By: Heidi Finch
+44 20 8652 3214

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