FocusStrong competition, slow demand temper Europe plasticizer hikes

06 September 2012 15:48  [Source: ICIS news]

By Abache Abreu

LONDON (ICIS)--September price increases in the European plasticizers market have fallen short of the three-digit targets set up by producers to offset higher upstream costs because of slow demand, ample availability and intense competition, market sources said on Thursday.

While the turnaround season is gradually coming to a end, increasing supply and inventories, the recovery in downstream demand after the holiday season has been slower-than-expected on economic uncertainty and thin activity in the downstream polyvinyl chloride (PVC), construction and automotive sectors.

In addition, competition for market share has been intense for most plasticizers, with buyers reporting three-digit price gaps between the lowest and highest offers available in the market. This has constrained producers' efforts to pass on the additional cost of Europe September feedstocks to downstream customers.

Naphtha spot prices have increased by more than $100/tonne since the beginning of August, the September propylene contract price was up by €105/tonne from August, an initial September orthoxylene (OX) contract has been agreed up by €50/tonne, and September purified terephthalic acid (PTA) contract prices are expected to increase by €50/tonne.

“It seems that in general suppliers are more eager to increase sales volumes and that is putting some constraints in increasing prices,” a producer said.

“There is a huge difference in prices depending on the supplier,” said a regular buyer of diisononyl phthalate (DINP), diisodecyl phthalate (DIDP), dioctyl terephthalate (DOTP) and dioctyl adipate (DOA).

By close of business on 5 September, producers had confirmed increases of €80-100/tonne for ortho-phthalate plasticizers such as dioctyl phthalate (DOP), DINP and DPHP and rollovers to increases of €70/tonne for non ortho-phthalate compounds such as DOTP, DOA and trioctyl trimellitate (TOTM).

On the other hand, buyers said that most price discussions were continuing, as the availability of competitive offers had delayed negotiations and reduced potential price hikes.

DOP free delivered spot prices increased to €1,640-1,690/tonne FD NWE, up by €50/tonne on tight supply and higher upstream propylene and OX values. The market remains balanced to tight because of low inventories caused by long maintenance shutdowns earlier in the year.

DINP spot prices increased to €1,680-1,720/tonne FD NWE, up by €50/tonne on higher naphtha and OX values. Producers confirmed increases of €80-100/tonne, but there was no confirmation from buyers of prices above €1,720/tonne FD. Most negotiations are continuing.

DIDP spot buyers said material is being offered with an increase of €100-150/tonne from the August level of €1,630-1,670/tonne FD NWE, adding that negotiations for September are ongoing. Downstream inventories are at good levels and there is plenty of material in the market, a buyer said.

DPHP spot prices increased to €1,680-1,730/tonne FD NWE, up by €50/tonne on higher naphtha and OX values. Two producers have achieved prices above €1,750/tonne, but there is no sufficient confirmation from buyers to substantiate prices above €1,730/tonne.

DOTP spot prices increased to €1,600-1,650/tonne FD NWE, up by €30/tonne on higher propylene and PTA values. Producers' price ideas were at €1,650-1,690/tonne, but there was no buy-side confirmation of prices above €1,650/tonne. One producer said demand was slow because of pre-buying activity in late August.

DOA spot prices remain unchanged at €1,850-1,950/tonne FD NWE, pending further negotiations. Some business have been concluded with an increase of €70/tonne, according to one producer. One buyer said there was a price difference of €110/tonne between the highest and the lowest offers available.

TOTM prices are unchanged at the August level of €1,950-2,050/tonne FD NWE, pending further negotiations. According to a supplier, some spot deals have been concluded at an average increase of €70/tonne.

($1 = €0.79)

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By: Abache Abreu
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