07 October 2012 17:56 [Source: ICIS news]
BUDAPEST (ICIS)--European propylene oxide (PO) demand into the downstream surfactants sector has been fairly steady so far this year, despite economic uncertainty and feedstock price volatility, but there has been a shift in product type and/or downstream contract validity, PO consumers said on Sunday.
“Surfactants - you always need, its just a matter of what brand you buy,” said one PO buyer on the sidelines at the 46th annual European Petrochemical Association (EPCA) meeting.
For commodity surfactants, cost competitive white label (i.e non-branded) products are growing, while the generally higher priced big brand surfactants are finding it more difficult, said one PO buyer, as end-consumers are very mindful of cutting costs amid the tough economic environment.
PO buyers have lamented eroded margins this year on the back of high feedstock propylene costs, which are agreed on a monthly basis, but downstream contracts, which are traditionally agreed on a quarterly basis.
One main PO consumer said it had been necessary to adapt downstream contracts for the high volume commodities to a monthly basis where possible, as it could not digest the heightened feedstock volatility.
The same source conceded that it could not switch all its downstream contracts to monthly, which means price erosion and greater risk, if feedstocks remain firm and it cannot pass them on as quickly.
Another PO consumer reluctantly accepted that the quarterly contract tradition continues to prevail in the downstream surfactants sector in most cases, with only limited contracts ageed on a monthly basis.
European PO producers have said that consumption has held up reasonably well, with one manufacturer pinpointing particularly good demand in the downstream polyurethane (PU) sector.#
The latter is attributed to the general growth potential for PU in eastern Europe and legislative requirements for insulation.
The annual EPCA meeting runs from 6-10 October.
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