European TDI prices firm in February on higher costs, limited supply

08 February 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices have increased in February, driven by mounting toluene cost pressure and the need to recoup lost margins, market players said on Wednesday.

Reduced availability compared with recent weeks was also a factor in the upward price move.

Price increases were mainly pegged at €100/tonne ($133/tonne) in February. Lower increases of €40-80/tonne and larger hikes of €150/tonne were also reported.

Hikes of €200/tonne plus were heard from a few players, but this was reflective of the combined price movement from December to February rather than for February only.

While there is a general price move of plus €100/tonne in February, there is also some variation in absolute numbers reported.

Prices were largely pegged between €1,800/tonne and slightly above €1,900/tonne, depending on starting point and volume size.

The range moved up to €1,800-1,940/tonne FD (free delivered) NWE (northwest Europe), which represents an increase of €40-60/tonne from January, according to ICIS.

Higher contract prices in the mid-to-upper €1,900s/tonne FD in February were also reported by a few producers, but there was insufficient market confirmation to substantiate this

TDI contract prices were mainly fixed for February, prior to Swedish-based specialty chemical producer Perstorp’s force majeure declaration on its TDI production in France, as well as a spate of production problems for a few other suppliers, thought to be related to the cold temperatures and snow across Europe.

However, both buyers and sellers expect that the uptrend in TDI prices is likely to continue into March, particularly if production problems persist, on top of the firming in toluene costs and the ongoing need to restore profitability for TDI.

Prices of up to €2,000/tonne FD were also reported by a few producers in February, but this was mainly seen to reflect spot levels driven by supply limitations and is also likely to indicate higher numbers for contract prices in March.

The TDI market has tightened in early February because of reasonable-to-good demand and a spate of production problems.

This supply situation marks a stark contrast from the length in the market seen in the second half of 2011, because of the combination of new capacity and the slowdown in demand, triggered by economic concerns.

Recent production and import cuts, as well as improving export opportunities have helped to move the market to a more balanced state during January

However, supply has since become limited, because of production problems.

One buyer said that it is managing with existing stocks this week, but if the production constraints continue, obtaining supply will become increasingly challenging, because stocks are low throughout the industry.

Sellers said they are receiving additional enquiries, because of the supply constraints, but they are unable to accommodate them, as they are already sold out.

A few other buyers said they had sufficient contractual supply and had not been directly affected by the production difficulties in the market.

One customer said that the market is more balanced than in recent weeks, but it is not convinced that supply is restricted as reported by others.

TDI is used in the manufacture of resilient polyurethane foams for such uses as bedding, upholstery and carpet underlay.


($1=€0.75)

For more on TDI visit ICIS chemical intelligence


By: Heidi Finch
+44 20 8652 3214



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