Europe June flexible polyols fall, rigid polyols roll over

20 June 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European polyol contract settlements vary from rollovers to declines in June, depending on the source and the grade, as lower upstream propylene costs were weighed against supply and feedstock differences, market players said on Wednesday.

Slabstock conventional flexible polyol contract prices were generally reported lower in June on the back of significant drops in propylene feedstock and good availability. Price decreases were largely confirmed at around €50/tonne ($63/tonne).

But smaller reductions, of €20-30/tonne, and larger price drops, of €70/tonne were also heard. But these were seen as outliers.

By contrast, a few buying and selling sources reported either rollovers or a mix of rollovers to minor reductions of €20-30/tonne in June, although these were not widely confirmed in the market.

In terms of absolute numbers, slabstock flexible polyol prices were assessed in June at €1,800-1,900/tonne FD (free delivered) NWE (northwest Europe), according to ICIS. This represents a reduction of €50/tonne from the previous month.

Numbers either side of the range are also heard, but they are not seen to reflect the general market.

Flexible consumption in the downstream bedding and furniture sectors is lower than expected in some cases, because of a combination of the seasonal lull and underlying economic concerns.

There was also talk of some destocking taking place in anticipation of lower prices, resulting from increasing speculation that upstream propylene could continue its downtrend in July, which is likely to further pressure commodity polyol prices at the least.

By contrast, one polyols manufacturer said that its demand remains below pre-crisis levels, but has stabilised in relation to the previous quarter, although it does expect a slowdown over the summer holidays.

A few manufacturers said that demand remains good in June, particularly in central and eastern Europe, which is thought to be due to more growth potential in the region, when compared with the more mature northwest European market.

Flexible polyol supply is balanced to long on the back of some demand softness and good polyols output.

For sucrose-base rigid polyols, prices generally held their value in June, as the lower feedstock costs were offset by structurally balanced to snug supply. In addition, rigid polyols are less susceptible to rapid changes based on  propylene feedstock movements because they have less upstream propylene and propylene oxide (PO) based content when compared with slabstock conventional flexible polyols.

Rigid polyol contracts are also mixed between monthly and quarterly business, which means that a proportion of contract prices will roll over until the end of June. Sucrose-based rigid polyols are assessed steady, between €2,010-2,070/tonne FD NWE.

One customer said it had secured a rollover to reduction of €50/tonne for rigid polyols in June, quoting prices below this range, but this information was seen to be an exception.

Rigid polyols demand into the downstream construction sector is reasonable, albeit not as healthy as it should be during the second quarter, which is attributed to soft economic conditions. Rigid polyols supply remains balanced to tight.

In production news, maintenance at Dow Chemical’s rigid operations at Terneuzen, in the Netherlands, is expected to be completed soon, with a restart due to take place this weekend. Planned maintenance took place at the rigid train earlier in June, and it was scheduled to last for around two weeks.

($1 = €0.79)

By: Heidi Finch
+44 20 8652 3214

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