18 July 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--European methyl di-p-phenylene isocyanate (MDI) contract settlements have mostly rolled over into July and the third quarter, as the needs to recoup lost margins are being weighed against fairly balanced market conditions, market players said on Wednesday.
MDI contract prices in July are assessed steady at €2,030-2,150/tonne ($2,506-2,654/tonne) FD (free delivered) NWE (northwest ?xml:namespace>
Prices above and below these ranges were also heard, but were not seen to reflect the general market level.
MDI producers had attempted to raise prices across the board in July and the third quarter in view of the cumulative benzene feedstock cost increases in May and June, which they had not recovered, and the need to achieve re-investment economics. However, buyers strongly resisted, stating demand remains fragile and was insufficient to support any general upward price movements.
Some selective increases, ranging from €10-80/tonne were also reported by selling sources for July and the third quarter, but there was insufficient market confirmation to substantiate this as a general trend.
By contrast, one buyer said it had secured a mix of rollovers and downward price adjustments of €30/tonne for its third-quarter crude MDI contracts, but the downward pressure was not widely confirmed by others.
MDI demand remains reasonable to slow, depending on source. Sellers maintain demand is holding up reasonably well in northwest Europe and is in line with seasonal expectations for this time of year, although buyers said consumption remains sluggish, particularly in the Mediterranean, where the impact of economic limitations are particularly affecting southern Europe.
MDI availability has been largely sufficient, despite a number of production constraints, amid signs of slowing demand. There is some talk in the market that product is on the snug side from sellers, but buyers maintain they are sufficiently covered and have not experienced any supply problems.
News of a price reduction of €68/tonne in the European July benzene contract price, which was settled at €953/tonne FOB (free on board) NWE, came too late to have any effect on MDI prices in July, although sellers are closely monitoring the situation. Buyers, however, maintain MDI prices are mainly driven by market fundamentals rather than feedstocks.
Early indications for MDI business in August centre on a rollover as fairly balanced market conditions and summer holiday absences are weighed against the recent firming in the upstream benzene spot market, where prices are trading significantly above the July contract price level.
In manufacturing news, Bayer MaterialScience lifted the force majeure this week on its MDI and its toluene di-isocyanate (TDI) supplies in Europe, the Middle East and
BASF’s MDI facility in
Dow Chemical’s MDI plant in Stade,
Operating rates at BorsodChem’s MDI M2 plant in Kazincbarcika,
($1 = €0.81)
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