21 September 2012 11:05 [Source: ICB]
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 say.
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, although 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 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.
Dow Chemical's MDI plant in Estarreja, Portugal, went into an unplanned outage for technical reasons. Maintenance planned for 10 days from the end of September has been brought forward. Dow'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, Belgium, has been running at reduced operating rates since last week for maintenance reasons; this is expected to last for around six weeks. MDI output at the site has been further restricted by some upstream supply constraints. The plant has a capacity of 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. This was not, however, officially confirmed at source.
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