Europe August TDI contract prices stable to softer on slow market

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

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices have been agreed stable to softer in August, despite higher upstream toluene costs, because of lower demand and improved supply, said market players on Wednesday.

Some producers said they had rolled over prices and had not accepted any decreases in August, based on fairly balanced market conditions.

Other buying and selling sources, however, acknowledged that there were some rollovers, but also downward adjustments, particularly at the upper end of the range.

The latter was attributed to the fact that TDI prices had moved up significantly in the first five months of the year, driven by market tightness. And now that this tightness had subsided, this was being compensated by some relief, particularly for the higher-priced accounts.

Prices are assessed in August at €2,180-2,270/tonne ($2,691-2,802/tonne) FD (free delivered) WE (West Europe), according to ICIS. This reflects a rollover at the low end, but a reduction of €30/tonne at the upper end of the range.

Numbers either side of the range were also heard, but not widely confirmed.

Demand from the downstream bedding and furniture sectors remains seasonally slow in August, as expected, because of the summer holidays. By contrast, one producer said that it had seen better-than-expected demand in August. It attributed this to less of a pronounced seasonal lull in demand or some possible pre-buying activity, in anticipation of possible price increases in August. 

The TDI market is better balanced in August than expected, despite low seasonal demand in the downsteam bedding and furniture sectors, because of a spate of production constraints, planned and unplanned. The latter include Bayer MaterialScience's force majeure on TDI supplies in Europe, the Middle East and Africa from mid-June and into July, following disruption at its Brunsbuettel site, and production hiccups for some other suppliers.

These constraints and attractive export opportunities to South America and Africa have helped to offset the seasonal lull in demand.

Looking to September, sellers are looking to increase prices, taking into account higher production costs and the expected seasonal uptick in demand in the main downstream bedding and furniture sectors.

Buyers, however, consider increases for TDI in September unlikely, provided there are no production problems. They say that the increase in toluene feedstock costs in August has been insignificant and they do not expect any real improvement in demand, if the economy remains fragile.

($1 = €0.81)

By: Heidi Finch
+44 20 8652 3214

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