Europe TDI January prices firm on the need to restore profitability

11 January 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices have largely firmed in January, driven by the urgent need to restore profitability and supported by some demand uplift, market players said on Wednesday.

This marks the first time that European TDI prices have increased since May 2011, according to ICIS price history. 

In the first half of 2011, there was a gradual uptrend in prices, but that was followed by a reversal in price direction in the second half of the year, when TDI prices plummeted by €310–320/tonne ($397–410/tonne) between May and December 2011.

TDI producers had targeted hikes of up to €200/tonne in January, citing the urgent need to recover margins as justification.

While buyers understood the need to increase prices for TDI following recent price erosion and cost pressure, they considered proposed increases of €200/tonne in one go for January too ambitious, particularly in view of the fragile economic climate.

TDI contract prices in January have largely been agreed at €1,760-1,880/tonne FD NWE, which represents an increase of €50–100/tonne from December.

Larger hikes of up to €150/tonne were heard in a few cases, but there was insufficient market confirmation to substantiate this.

By contrast, rollovers were also heard in some selective cases, but it was not seen to reflect the general market trend.

Numbers either side of the range were also reported in a few cases, but they were not widely confirmed.

Looking ahead, sellers are determined to increase prices further, particularly in view of increasing toluene feedstock costs. 

One buyer said that TDI prices were at unsustainable levels and further increases could be possible, provided it was a manageable, step-wise approach.

TDI demand into the main downstream bedding and furniture sector varies according to country and region.

Players have pointed to eastern Europe as continuing to perform well, supported by growth potential and some export opportunities.

Market activity in Germany is also holding up reasonably well in January, which is thought to be because of trade fairs taking place in the country and showcasing of new designs, which could be helping to stimulate demand.

There is also some talk of restocking taking place in January, following low downstream levels in the second half of 2011, as well as some pre-buying, on the back of the underlying firming trend for TDI.

Despite this, demand in the Netherlands remains disappointing, according to some players, and below the level seen in the same period last year, which they attributed to economic uncertainty and reduced consumer spending.

The length in the TDI market has largely dissipated and the market has balanced out to a certain extent, according to some players.

This is attributed to some recent and ongoing reduced output and imports, as well as some slight improvement in domestic demand and export opportunities.

A few buyers, however, maintain that supply remains plentiful on the back of recent new capacity and lower than expected demand over recent months.

($1 = €0.78)

For more on TDI  visit ICIS chemical intelligence


By: Heidi Finch
+44 20 8652 3214



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