Europe TDI prices mostly fall in July on soft market

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

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices mainly dropped in July on soft market conditions, market players said on Wednesday.

Rollovers and slight upward adjustments were also heard in a few cases but they are not seen to reflect the general market direction.

Producers, however, are dismayed by the general downward pressure July prices as they have been struggling with poor margins over several months, which have been further exacerbated by higher toluene feedstock costs.

However, both sellers and buyers acknowledge that demand is lowfrom the downstream bedding and furniture sectors. This is thought to be due to economic constraints, which has limited consumer confidence and spending.

Also, there is stagnancy in some housing markets, which have a direct correlation with bedding and furniture sales, as well as the approaching summer lull in demand.

Generally, ample TDI supply and the arrival of new capacity for one main producer in Europe in the second half of the year has also added to the softer market sentiment.

Price reductions for TDI in July range from €10-90/tonne ($14-130/tonne), depending on settlement time.

For early settlements, lower reductions were possible, although later settlements had secured larger decreases as the summer holidays loom and demand is set to slacken further.

July TDI prices are reported in a wide range between €1,950-2,050/tonne FD (free delivered) NWE (northwest Europe), according to ICIS. This represents a decrease of €40-80/tonne from June. 

Traditionally, TDI contracts are fixed in July for two months to cover the summer holiday period. However, there has been some reluctance on the buy-side to do this because they expect the possibility of further decreases in August as they move deeper into the summer holiday period.

Looking to September, manufacturers are hopeful that demand will seasonally pick-up after the summer holidays, which will enable them to push for price increases and look to restore TDI profitability.

TDI sellers’s margins have been squeezed over recent months, following toluene feedstock increases and some price erosion for TDI over a similar period, which have yet to be recovered.

One producer pegs its initial target at least at plus-€100/tonne for September, although it said that this is subject to change, pending the price evolution for toluene feedstocks and TDI.

Buyers, however, remain reluctant to comment, stating that it is too early to discuss market fundamentals, particularly due to economic uncertainty and upstream volatility.

In production news, market sources suggest that Borsodchem’s new TDI No 2 facility at Kazinbarcika, in Hungary has started up, but they have not noticed any new material in the market, stating that it will take time before the full ramp-up has been realised.

The company previously said the unit would come on line in early June, with an initial utilisation of 160,000 tonnes/year which will be ramped up to 200,000 tonnes/year by the end of 2011, depending on market conditions.

The existing TDI No 1 plant, also at the Hungarian site, is expected to undergo planned maintenance at the end of July. The older plant, which has a nameplate capacity of 90,000 tonnes/year, is likely to be temporarily idled once the smooth start-up for the TDI No 2 unit has been achieved due to insufficient TDI margins.

($1 = €0.69)

For more on TDI visit ICIS chemical intelligence


By: Heidi Finch
+44 20 8652 3214



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