Europe TDI prices rise in April mainly on higher costs

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

LONDON (ICIS)--European toluene di-isocyanate (TDI) contracts rose above €2,000/tonne FD ($2,817/tonne) in April, because of a firm producer stance and the need to restore profitability, in view of increasing toluene feedstock and energy costs, market players said on Wednesday.

This reflected an increase of €30/tonne for low-end business from March, according to ICIS.

Sellers said that solid TDI demand and balanced-to-tight supply were also contributing to the upward price move in April.

Buyers, however, said that TDI price increases in April were purely driven by higher upstream costs, as they considered the market fairly balanced.

Producers mainly said they had secured hikes of €50-100/tonne for April, with larger increases of €150/tonne also heard from one supplier, albeit in exceptional cases.

By contrast, one supplier conceded that its TDI prices for April had been agreed between a rollover to plus €30-40/tonne, adding that TDI demand was restricted by short supply of polyols, its counterpart in flexible foam manufacturing.

Buyers, however, largely confirmed increases of €30-50/tonne as a maximum for April.

Rollovers were also heard in a few cases, but they were not seen to reflect the general trend.

Despite the discrepancy in the magnitude of increase reported, buyers and sellers largely confirmed TDI prices for April between €2,000-2,060/tonne FD (free delivered) NWE (northwest Europe), depending on customer size.

The ICIS range was changed to reflect this accordingly. This reflected a rise of €30/tonne from March.

Views on TDI consumption were mixed, depending on source. Sellers maintained that demand was surprisingly good, despite the forthcoming Easter holidays. They attributed this to some supply constraints for a few of its competitors.

Buyers, however, described demand as reasonable-to-slightly slower in the downstream bedding and furniture sectors. The latter was attributed to the onset of low season, economic constraints in some countries, as well as intensified competition in the downstream foam sector, particularly in central Europe.

The TDI market was generally balanced, albeit with supply limitations for a few sellers. The latter was linked to a series of planned and unplanned outages.

Sellers added that the European TDI market was likely to tighten, based on increasing export opportunities to the Middle East and Africa. This resulted from the shortfall in Asian imports, caused by the recent earthquake and tsunami in Japan.

European buyers, however, said that TDI volumes remained sufficient. and they had not experienced any supply restrictions.

In manufacturing news, there was no further update available on the status of Ciech subsidiary Zachem's 75,000 tonne/year TDI facility at Bydgoszcz in Poland, which had shut down unexpectedly in the second half of March because of technical difficulties.

Forthcoming maintenance was due to take place at BASF's 80,000 tonne/year TDI plant at Schwarzheide in Germany at the end of April or early May and would last for approximately three to four weeks, a company spokesperson said.

($1 = €0.71)


By: Heidi Finch
+44 20 8652 3214



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