Europe Sept MDI contracts largely roll over in balanced market

12 September 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European methyl di-p-phenylene isocyanate (MDI) contract prices have largely rolled over into September because of fairly balanced market conditions and a large proportion of quarterly contract business, market players said on Wednesday.

MDI price ranges in September were assessed steady at €2,030-2,150/tonne ($2,603-2,756/tonne) FD (free delivered) NWE (northwest Europe) for crude MDI and €2,130-2,200/tonne FD NWE for pure MDI, according to ICIS.

Numbers below the range were also heard on the buy-side, but this was not widely confirmed, while selective price increases of €10-50/tonne were heard for MDI in September in a few cases, althouh this was not seen to reflect the general market trend.

MDI manufacturers stressed the underlying need to increase prices to recoup the higher benzene costs in recent months, but the main focus of their upward price initiative was on October contracts rather than September - with the re-negotiation of quarterly, as well as monthly business. 

Buyers, however, were strongly resisting any upward price movement in September, stating that demand was insufficient to support an increase.

Looking to October and the fourth quarter, buyers said they had not yet started price discussions, but added they were equally as resistant to any possible price increases in view of demand, which they consider to be fragile for economic reasons, and because of the onset of low seasonal demand in the downstream construction sector.

MDI consumption varies, depending on source. Sellers maintain that demand is better in September than it was in August, as players restock after the summer holidays. Buyers, by contrast, said consumption is not as good as expected for this time of year, which they attribute to soft macroeconomic conditions.

The MDI market is sufficiently covered, although a few suppliers have low stocks because of maintenance or upstream supply limitations. Despite this, buyers said they had not experienced any supply problems.

In manufacturing news, Dow Chemical’s MDI plant in Estarreja, Portugal, went into an unplanned outage at the start of the week for technical reasons. Maintenance was planned to take place at the end of September for 10 days but has been brought forward. The company’s other MDI facility in Stade, Germany, is running at a reduced 80% capacity because of some upstream supply limitations.

BASF’s MDI facility in Antwerp, Belguim, since last week has been running at reduced operating rates for maintenance reasons and this is expected to last for around six weeks. The MDI output at the site has also been further restricted because of some upstream supply constraints. This MDI plant has the capacity to produce up to 560,000 tonnes/year, according to ICIS Plants and Projects database.

Market sources have said the maintenance at the Antwerp MDI facility may also include a nameplate capacity increase of around 100,000 tonnes/year, although the new capacity is not likely to be utilised until the middle of next year, depending on demand and profitability. The information on capacity expansion, however, was not officially confirmed at source.

($1 = €0.78)

By: Heidi Finch
+44 20 8652 3214

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