BorsodChem targets plus €150/tonne in Feb for MDI in Europe

17 January 2012 18:23  [Source: ICIS news]

LONDON (ICIS)--BorsodChem plans to increase its methyl di-p-phenylene isocyanate (MDI) prices by €150/tonne ($190/tonne) as of 1 February in Europe and emerging markets, in view of intensified cost pressure on already eroded margins, the company said on Tuesday.

Hungary's BorsodChem cited its ongoing need to achieve re-investment economics as further justification for the MDI price initiative.

Other MDI producers are also determined to implement a price hike in February, based on a larger-than-anticipated increase in benzene feedstock costs in January and the expectation that the steep uptrend will continue in February.

One MDI manufacturer said it has revised its initial increase target from €150/tonne to €200/tonne for January and February combined, based on a further firming price evolution for benzene. The same source said that if significant increases were not accepted, it would make no sense to continue producing.

Buying sources said that some upward price movement for MDI may be possible in February, based on feedstock pressure, but they consider large increases unrealistic. They said that this was because of good availability and ongoing low season demand in the main downstream construction sector.

A few other customers had suggested they did not see any chance to increase MDI prices until demand for crude MDI picked up seasonally at the end of the first quarter/in the second quarter, depending on weather conditions.

January European MDI contract prices were largely agreed at a rollover, despite some increases. Crude MDI was assessed at €1,850–1,950/tonne FD (free delivered) NWE (northwest Europe) and pure MDI at €1,925–2,000/tonne FD NWE, according to ICIS.

MDI producers’ attempts to raise prices across the board in January were foiled by some early settlements in December, prior to news of the significant benzene hike, and strong buyer resistance because of low seasonality for crude MDI. Players just returning to the market after the Christmas/new year holidays also made it difficult to implement price increases in January.

($1 = €0.79)

For more on MDI, please visit ICIS chemical intelligence

By: Heidi Finch
+44 20 8652 3214

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