Recent downtrend ends as Europe TDI prices stabilise in December

07 December 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--The recent downtrend in European toluene di-isocyanate (TDI) contract prices has come to an end with most December prices stabilising as sellers held firm and avoided accepting lower prices, market players said on Wednesday.

The TDI price range for December was assessed between €1,710-1,780/tonne ($2,280-2,373/tonne) FD (free delivered) NWE (northwest Europe), according to ICIS, representing a rollover from November. 

Sellers held a firm rollover position in December, stating that current price levels were unacceptably low and that they were prepared to lose volumes rather than sell at a loss. Buyers also generally understood the difficult cost situation for TDI sellers, who have been struggling with price erosion for TDI over several successive months, along with relatively high feedstock costs.

Despite this, price reductions were reported by a few buyers in December, but this was seen to be an exception rather than the general trend. Even those buyers who reported reductions agreed that their prices were largely within the existing price range. Numbers as low as €1,600/tonne net and €1,650-1,700/tonne FD gross were also heard, but they were not widely confirmed.

Demand in the main downstream bedding and furniture sectors differs according to source and region. Some sources said that offtake has been below expectations during the autumn/early winter period in parts of northwest Europe because of reduced consumer confidence and a further slowdown in the market into December. The slowdown was caused by the approaching holidays and stricter inventory control at year-end, which has been exacerbated by economic uncertainty.

In central Europe, consumption is holding up better than in northwest Europe because there is less of a Christmas-related slowdown. A few players even said that their demand was surprisingly good so far in December, although this was attributed to some exceptional circumstances.

The market is still on the long side because of a global overcapacity and a slowing demand. Although excess volumes seen in September and October have been removed in some cases due to production and import cuts, as well as some additional export opportunities to south America.

A few buyers, however, maintain that material is still plentiful and that production cutbacks have not been sufficient, particularly in view of the fact that there are also some imports from Asia in the European market.

Looking to January, Borsodchem recently announced its plans to increase its TDI prices by €200/tonne in Europe to recoup lost margins.

Other sellers said they would also look to raise prices for the same reasons, although targets were not yet officially disclosed. Suppliers are also hopeful that there will be some need to restock in January amid low downstream inventories, which they said could support their upward price initiative.

Buyers, however, remain sceptical about any price increases in January, stating that the market is not strong enough to support this unless there is some recovery demand. They consider targets of plus €200/tonne unrealistic, particularly in view of the fragile economic climate. 

($1 = €0.75)

For more on TDI visit ICIS chemical intelligence


By: Heidi Finch
+44 20 8652 3214



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