26 August 2011 16:35 [Source: ICIS news]
LONDON (ICIS)--The overall sentiment for the third-quarter solvents market remained bearish, sources said early on Friday.
The coatings industry – a major source of demand for solvents – has been consistent in its message of a slowdown in demand during the third quarter.
Industry players cite economic uncertainty, high solvent prices and difficulties in passing on costs downstream as reasons for the slowdown.
Solvents – mainly used in industrial and automotive coatings – are vulnerable to short-term fluctuations in the construction and automotive industries.
“It will not be a drastic 20% drop, more like a slight decrease,” a coatings manufacturer said, speaking about the overall demand during the third quarter.
“Our volumes will be down in September,” the source added.
There is additional downwards pressure on prices for September because of a fall in feedstock prices.
An initial European ethylene (C2) contract settlement for September has been agreed at €1,115/tonne ($1,593/tonne), down by €5/tonne from August.
And a European propylene (C3) contract settlement for September has been fully agreed at €1,078/tonne ($1,540/tonne), down by €37/tonne from August.
Meanwhile, producers and distributors agree the feedstock falls would put pressure on prices, but say they are hoping for a pick-up in September demand.
A distributor said: “We expect some demand in ?xml:namespace>
A major solvent producer said: “From the market situation, a slight decrease can be expected, but it is not clear by how much. It will depend on raw materials and demand. It is also possible that demand could be good in the beginning [of September] since buyers have to catch up. We will know for the first week of Sept.”
($1 = €.70)
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