Dow to increase Europe methylene chloride prices by €100/tonne

21 February 2012 16:21  [Source: ICIS news]

LONDON (ICIS)--Dow Chemical has announced a €100/tonne increase on methylene chloride prices in Europe with effect from 1 March, a company source said on Tuesday.

The announcement was made in response to “extremely tight conditions” in the European market, in which demand has improved and inventories have fallen substantially, the source at the US-based chemicals company said.

The price hike will affect contract, spot and export business and is aimed at easing pressure on margins, which have been low since the end of 2011.  “Profitability is very bad and needs improvement,” the source said.

Dow Chemical’s supplies of methylene chloride are currently on allocation and are expected to remain so until June.

Supply constraints in the market could increase, as at least three European producers are expected to shut their facilities for maintenance in the next three months.

Other suppliers have expressed their intentions to increase prices in March, although the extent of the rises is unclear.

One producer has successfully implemented increases of €10–20/tonne in domestic prices in the past two weeks, and is targeting a further rise of up to €20/tonne ($26/tonne) by the end of the month.

"Gas and electricity prices have gone up because of the cold weather and so have feedstock costs," the producer said.

Buyers are expecting moderate increases in line with rising feedstock and production costs, but are reluctant to accept a €100/tonne increase.

($1 = €0.76)

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By: Abache Abreu
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