Europe solvent price drop may continue on downstream worries

05 August 2011 16:06  [Source: ICIS news]

LONDON (ICIS)--Some European solvent buyers and producers are already reassessing their expectations of a pick-up in prices after the summer holiday months are over, sources said on Friday.

Demand from the downstream coatings markets could continue on a hand-to-mouth basis in September, because of caution over the economy, market players said.

Solvents – mainly used in industrial and automotive coatings – are vulnerable to short-term fluctuations in the construction and automotive industries.

On Friday, solvent prices fell by $10–40/tonne (€7–28/tonne) on slower demand, as parts of Europe continued further into the summer holiday season.

“The summer break has brought prices down, [but also] the prospect for demand for the next months is seen as lower because of the economic outlook,” a sales and marketing executive at a major solvent producer said.

The comment came in the wake of a sharp fall in crude prices on Friday, amid ongoing worries of another recession hitting Europe and the US.

“The US and [European] crisis will have an impact on the consumption of lots of products,” the producer explained.

The source added it had brought prices down by $20/tonne for butyl acetate, butyl glycol, butyl di glycol, methoxy propanol and propylene glycol ether.

Meanwhile, a major solvent buyer and coatings manufacturer in Europe said: “Demand will not increase in September – the markets will be back [from holidays], but in terms of the coatings industry, I have a clear view there is not any sign of increased demand due to global economic prospects.”

Solvent prices will decrease in September, following the sharp decrease in crude prices, the source concluded.

In a recent press conference on company earnings, another solvent buyer and major coatings producer admitted that its full-year earnings were dependent on “very volatile” market conditions.

However, a second solvent producer stressed that it did not foresee anything but an improvement in demand as the European market returned after the summer holidays.

“The economic outlook does not generally affect the chemical markets too much,” the producer added.

By: Cuckoo James
+44 (0) 208 652 3214

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