Europe Jan ’12 polyol prices steady, despite selective increases

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

LONDON (ICIS)--European polyol producers’ attempts to increase contract prices by €100–200/tonne ($128–256/tonne) in January, to recoup lost margins, have been thwarted by the limited increase in propylene feedstock costs this month and a well-supplied market, market players said on Wednesday.

Standard flexible polyol prices have largely rolled over into January, according to some buyers and sellers.

One main producer, however, said it had been firm on its price increase stance in January for margin and re-investment reasons, and had implemented increases of €80/tonne for flexible polyols. It also conceded that it had met strong buyer resistance, and saw reduced sales – although it said it was unclear if this was because of its price level or general demand.

Other suppliers said they had seen a mix of rollovers and selective increases of €20–50/tonne in January. One stated that it had a rollover for the first few weeks of the month, but had implemented some price rises in the second half of January, as players returned to the market after the holidays.

Buyers strongly resisted any price increases for polyols this month in most cases, considering price stability most realistic in January. This was on the back of fairly balanced market conditions, fragile economic conditions and relatively acceptable margins compared with its flexible counterpart, toluene di-isocyanate (TDI), which had seen significant price erosion during the second half of 2011.

Despite the mix of rollovers and selective increases, standard flexible polyol prices are largely confirmed within the range of €1,710–1,780/tonne FD (free delivered) NWE (northwest Europe) in January – unchanged from December levels.

For rigid polyols, prices are also reported relatively steady in the €1,900s/tonne FD NWE, based on limited feedstock pressure in January, balanced supply and low seasonal demand in the main downstream construction sector. One producer said it had implemented selective increases of €20–30/tonne for rigid polyols in January, but they were not widely confirmed in the market.

Looking ahead, sellers said they were determined to re-target price increases of at least €100–150/tonne in February, based on the expectation that propylene feedstock costs are likely to continue moving up. Buyers, however, said it was still too early to say if polyol price increases would be possible in February, stating that this will also depend on further propylene feedstock developments.

($1 = €0.78)

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By: Heidi Finch
+44 20 8652 3214



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