Europe polyol contract prices largely rollover in May

09 May 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European polyol contract prices have largely rolled over into May, as lower upstream costs are weighed against margin recovery and balanced market conditions, market players said on Wednesday.

However, there were some selective increases of €30-50/tonne ($39-65/tonne) for slabstock conventional polyols reported in May, depending on starting point.

Polyol producers had expressed the need to raise polyol prices in May, in view of the previous feedstock increases, which were yet to be recovered. However, price increases had proved difficult to justify in May in most cases in view of the upstream cost relief and balanced market conditions.

Buyers had also faced price increases for polyols, and its flexible counterpart toluene di-isocyanate, successively since the start of the year and had been struggling to pass this on downstream.

While there was a general stable pricing trend for slabstock conventional polylols in May, in terms of actual numbers, prices were reported in a narrower range of €1,850-1,950/tonne FD (free delivered) NWE (northwest Europe), according to ICIS. This represented a rollover at the low-end of the range and a reduction of €30/tonne at the upper part of the range.

Players added that prices in excess of the mid €1,900s/tonne FD were typically for high resilience or other speciality grades rather than slabstock conventional polyols.

According to some buyers, flexible polyol demand into the bedding and furniture sectors is slowing, earlier than is normally seasonally the case. They attributed this slowdown to general economic concerns limiting consumer spending. Polyol producers, however, described demand as fairly steady, with little to no evidence of any seasonal slowdown.

The flexible polyol market is largely balanced, although some buyers suggest that it is balanced-to-long, on the back of slowing demand.

For rigid polyols, prices are largely steady in May because of a number of quarterly contracts, where prices are fixed for the rest of the quarter following increases seen in April. For monthly business, there were a mix of settlements, ranging from rollovers, reductions of €50/tonne and increases of €20/tonne, depending on starting point. Despite this, prices were largely confirmed unchanged in the €2,000s/tonne FD.

Rigid demand into the downstream construction sector is relatively flat because of some underlying economic uncertainty, although there is some regional variation. Germany, Austria and Switzerland are holding up reasonably well. However, the UK and southern Europe are performing less well as they are seen to be more affected by economic constraints. By contrast, one producer said that demand is good, and in line with seasonality. The rigid polyol market is fairly balanced as flat demand is offset by a limited supply base.

In related news, Dow Chemical has completed maintenance on its rigid polyol train in northwest Europe, which took place during April. The same unit will also undergo similar maintenance work in June for a few weeks.

($1 = €0.77)

By: Heidi Finch
+44 20 8652 3214

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