Huntsman plans European MDI price increase for January 2012

30 November 2011 12:52  [Source: ICIS news]

LONDON (ICIS)--Huntsman’s polyurethanes division is targeting €100/tonne ($133/tonne) price hikes for its methyl di-p-phenylene isocyanate (MDI) products and MDI-based systems in Europe from 1 January, the US producer said on Wednesday.

“This price increase is necessary to address continuing inflationary pressures and the need to secure long-term reinvestment economics,” said Europe polyurethanes vice president Nick Webster.

Another supplier also recently expressed the need to raise MDI prices in January to recoup lost margins The same source has already cutback its MDI production due to insufficient profitability and seasonally lower demand.

Some sources suggest that Huntsman’s announcement may help to at least stabilise MDI prices in December, although there is some downward pressure from buyers on the back of soft market conditions.

One supplier said it is too early to say whether Huntsman’s price intiative will be successful, but acknowledges that it will be difficult to implement in January because of low season in the main downstream construction sector.

However, the same source added that Huntsman’s announcement is “a signal that prices need to go in the other direction.”

This follows recent price erosion on MDI because of demand softening amid general economic uncertainty and good domestic supply, supplemented by some import volumes.

Sellers, however, maintain that the MDI market is fairly balanced, stating that any seasonal slowdown in demand in December, because of the Christmas holidays, is being offset by production cutbacks.

One buyer considers Huntsman’s upward price intitiative as “unrealistic”, stating that the market is not ready to accept this. It can secure cheaper product from outside the region, the buyer added. 

European crude MDI contract prices in November were agreed between €1,880-1,970/tonne FD (free delivered) NWE (northwest Europe). This represents a reduction of €20-30/tonne from the previous month. For pure MDI, November contract prices were assessed down by €50/tonne at €1,925-2,2025/tonne FD NWE.

Since August 2011 to-date, crude MDI prices have dropped by €80-120/tonne.  Over a similar period, pure MDI contract prices have decreased by €125/tonne. However, upstream benzene costs have also been under downward pressure between August-November 2011.

($1 = €.75)

By: Heidi Finch
+44 20 8652 3214

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