Europe MDI contracts stable for July/Q3 on balanced market

06 July 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European crude methyl di-p-phenylene isocyanate (MDI) contract prices remain mainly stable in July and for the third quarter as a balanced market and a firm producer stance are weighed against feedstock price relief, market players said on Wednesday.

Crude MDI prices are largely confirmed within the existing range of €2,000-2,050/tonne ($2,899-2,971/tonne) FD (free delivered) NWE (northwest Europe), unchanged from June, according to ICIS. Numbers either side of the range are heard, but there is insufficient market confirmation to substantiate these levels.

There are, however, some exceptions. For crude MDI, some selective slight upward adjustments have been heard for accounts which had been lagging behind the rest of the market. But this has not been seen to reflect the general market direction.

By contrast, a few crude MDI customers in the Mediterranean say they have secured some price reductions for the whole month or for the second half of July and into August. This is due to the summer lull in demand, which is most pronounced in southern Europe. However, these reductions have not been confirmed on the sell-side. 

For pure MDI, prices are reported stable-to-softer in July, depending on source and starting point.

Low-end business has largely rolled over into July, although some buying and selling sources acknowledge that there has been some slight downward correction for high-end business.

This is due to some improvement in supply from the tightness a few months ago, following the end of production constraints for a few main players.

Pure MDI prices are pegged in July between €2,100-2,200/tonne FD NWE. This represents a rollover to reduction of €50/tonne from last month.

A few producers maintain that they have rolled over their prices across the board, adding that prices up to €2,250/tonne FD are still possible. However, there is insufficient market confirmation to substantiate the higher level.

MDI demand into the downstream appliance and construction sectors in northwest Europe remains good in July, with particular strength noted in the insulation sector. 

By contrast, in the Mediterrenean, offtake in the building sector is lower than expected, according to buyers. This is thought to be due to political and economic uncertainty as well as the onset of the summer holidays. However, sellers say they have not seen any slowdown yet.

In the downstream automotive industry, activity is holding up relatively well, although with a few signs of some slight softening ahead of summer plant turnarounds in July and August.

For pure MDI, performance in the downstream coatings, adhesives sealants and elastomers (CASE) and footwear sectors remains healthy, although one buyer says it has already seen some signs of a seasonal summer slowdown.

($1 = €0.69)

For more on MDI visit ICIS company intelligence

By: Heidi Finch
+44 20 8652 3214

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