Europe December polyol prices remain steady despite feedstocks

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

LONDON (ICIS)--European polyol contract prices have been largely stable in December, despite lower feedstock costs on balanced market conditions and a firm producer stance, market players said on Wednesday.

Flexible polyol prices are mainly confirmed within the range of €1,710-1,780/tonne ($2,280-2,373/tonne) FD (free delivered) NWE (northwest Europe), according to ICIS.

This is a rollover from November.

For rigid polyols, prices in December are also holding relatively steady in the €1,900s/tonne FD NWE, unchanged from November.

Price reductions were reported by a few buyers in December, but they were seen to be exceptions rather than the norm.

In addition, even though some flexible polyol buyers reported some price decreases, they still confirmed prices within the existing ranges, following price alignment with the rest of the market. Numbers below the flexible polyols range were heard in a few cases, but they were not widely confirmed.

One flexible polyol manufacturer said it had agreed to a rollover for the majority of its December business, but had also implemented some selective increases for those accounts with the lowest margins. However, the latter was not confirmed by other market players.

Flexible demand in the main downstream bedding and furniture sector is slowing further in December in parts of northwest Europe because of the approaching Christmas holidays and underlying concerns about the general economy, which has also dampened consumer spending over the past few months.

In central and eastern Europe, however, consumption is holding up better and thought to be less affected by the holidays.

Rigid polyol consumption in the downstream construction sector is seasonally low, although sellers maintain that it is still holding up so far.

However, buyers contest this, stating that demand is subdued because of low seasonality, as well as marcoeconomic concerns, which is stalling further investment in new building projects.

The European polyols market is relatively balanced, because any slowdown in demand is being offset by some production cuts and recent upstream propylene oxide (PO) and polyols plant outages.

Despite this, a few buyers suggest that the market is still lengthening. By contrast, one or two buying and selling sources said that supply is more restricted than expected, particularly for specialities, which they attribute to possible logistical problems, linked to low water levels along the Rhine, as well as recent production constraints.

Looking ahead, one manufacturer said it would look to increase its flexible polyols prices by €200/tonne as of 1 January and by a similar amount for rigid polyols as of 1 February for margin recovery and reinvestment purposes.

A few other suppliers also expressed the need to raise polyol prices, although they had not yet disclosed any targets. One seller said it is too early to gauge polyol prices for January, as it will also depend on feedstock developments.

Buyers, however, said they would resist price increases in January, stating that the market is not strong enough to support such hikes.

One buyer did not rule out the possibility of some additional seasonal pull on upstream propylene oxide (PO) supply during the winter season, which could limit PO availability for polyols and exert some upward pressure on price, although this remains to be seen.

($1 = €0.75)

By: Heidi Finch
+44 20 8652 3214

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