Europe caustic soda producers target Q4 price hikes of €60-100/dmt

29 September 2011 17:27  [Source: ICIS news]

LONDON (ICIS)--Major northwest European chlor-alkali producers will target fourth-quarter caustic soda contract price hikes in a range of €60-100/dry metric tonne ($81-141/dmt), sellers said on Thursday.

There have been a variety of targets and two producers reviewed initial hikes of €60/dmt and €80/dmt to move them up to the high end. 

There are now three producers targeting a three-digit increase of €100/dmt for fourth-quarter contracts, but others are still offering increases of €60-80/dmt.

“When you look at the chlorine and its returns, it’s bad and it’s low and therefore to stay in the industry we need this margin over the caustic,” one manufacturer commented.

Another said: “There are lower chlorine production rates, especially caused by difficult markets surrounding downstream products, especially polyvinyl chloride (PVC).”

Most anticipated a tighter market. One seller said: “We don’t know exactly when it’s going to happen, but it will soon.”

A customer said, however: “Even with the cutbacks, I am not convinced consumption is very high,” adding that although an increase could be possible, “the reality is closer to €25-30/dmt.”

Reaction from many customers is very quiet as sources assess the market, demand requirements for the fourth quarter, as well as volumes on offer.

Contract volumes are for the most part confirmed covered, but limited spot offers, especially in the Mediterranean, are already resulting in some firmer price ideas although business is thin.

Offers in the Mediterranean are reported at $400/dmt free on board (FOB), but actual purchases have not yet been confirmed above $370/dmt FOB.

More news regarding contractual negotiations is expected after the approaching 45th annual European Petrochemical Association (EPCA) meeting being held 2-5 October in Berlin.

($1 = €0.74)

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By: Jane Massingham
+44 20 8652 3214

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