Europe May TDI prices firm slightly on feedstock costs

11 May 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices for May have firmed slightly from April, driven by higher costs for the feedstock toluene, market players said on Wednesday.

Most buyers and sellers agree that TDI prices have increased in May. Depending on source, however, there are some discrepancies about the magnitude of the price rises that were implemented.

Some suppliers have quoted price increases in May ranging from €60150/tonne ($87–217/tonne). However, some sellers, depending on customer size and contract type, acknowledged that there were also some lower increases, such as €2030/tonne, as well as rollovers.

One supplier said it had concluded some bi-monthly business for April and May, which means that prices have rolled over into this month.

The same supplier said that the bi-monthly agreements are limited in number and have been subject to a premium over monthly contract prices. Such agreements are therefore not seen to reflect the general movement in monthly pricing.

Overall, customers quoted average price increases in May of €2030/tonne, driven by recent feedstock pressure. They said that proposed price hikes in May of up to €300/tonne were unjustified, given the balanced market fundamentals and signs of slowing demand in the downstream bedding and furniture sectors.

There is also some discrepancy about actual TDI prices for May, with numbers quoted in a wide range between €2,0002,150/tonne FD (free delivered) NWE (northwest Europe), depending on source.

To reflect the slightly firmer sentiment, ICIS assessed May TDI prices at €2,0302,090/tonne FD NWE. This represents an increase of €30/tonne from the previous month.

The highest offers, heard from sellers, were at €2,150/tonne, but there was insufficient market confirmation to substantiate this level. One customer said it had received an offer up to €2,165/tonne FD NWE but rejected it.

Views about TDI consumption remain conflicting, depending on source and sector.

Customers have said there is slowing demand in the downstream bedding and furniture sectors because of good weather conditions in northwest Europe, which has switched consumer focus from furniture purchases to outdoor pursuits.

Some economic constraints in certain countries are also thought to be limiting TDI sales into the upholstery and mattress sectors. However, sellers contest any signs of a slowdown in demand, saying volumes are stable.

By contrast, automotive demand continues to hold up well, with particular strength noted for car sales in Germany. This is thought to be the result of some recovery in Germany's economy and good export activity.

The European TDI market is generally balanced, although a few sellers suggested a possible tightening because of the combination of plant outages and steady-to-good demand. However, customers said they are not convinced by any possible market tightness, stating that any supply constraints are being offset by some signs of lower demand.

In manufacturing news, BASF’s 80,000 tonne/year TDI facility at Schwarzheide, Germany, is thought to be undergoing planned maintenance in May. Confirmation on this from BASF was not available at the time of publication.

A BASF source previously said that the unit would start the planned turnaround at the end of April/early May, with a duration of approximately three weeks.

Maintenance is expected to take place at BorsodChem’s 90,000 tonne/year TDI plant at Kazincbarcika, Hungary, over the next few months.

Precise dates are likely to depend on the start-up of BorsodChem’s new TDI facility, its second, at the same site, which is expected to be operational by the third quarter. The nameplate capacity of the second TDI plant will be 200,000 tonnes/year.

($1 = €0.69)

For more on TDI visit ICIS chemical intelligence

By: Heidi Finch
+44 20 8652 3214

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