Europe MA Q4 contracts rise significantly on costs

09 November 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European liquid maleic anhydride (MA) contract prices have largely settled up by €100-130/tonne ($128-167/tonne) in the fourth quarter, because of spiking upstream n-butane costs during the third quarter and the need for margin recovery, market players said on Friday.

European MA contract prices in the fourth quarter are assessed at €1,670-1,760/tonne FD (free delivered) NWE (northwest Europe), according to ICIS.

Numbers below the range were also heard from some buyers, but they were seen to reflect net rather than gross values and for certain volumes, which are not representative of the general market.

By contrast, some sellers pegged prices at a minimum of €1,700/tonne FD, reporting values up to €1,780-1,800/tonne FD, but there was insufficient market confirmation to substantiate this.

One producer said it had not accepted increases lower than €150-160/tonne in the fourth quarter because it did not consider it economically viable to manufacture with increases lower than this, taking into account the high feedstock costs over recent months.

Other manufacturers said they had secured price rises of €120-150/tonne on average and between €100-150/tonne.

Buyers largely confirmed increases of around €100/tonne and slightly above in the fourth quarter. They acknowledged that this was because of the intensified cost pressure over recent months and the firm producer stance.

They said that larger target hikes had been negotiated down because of subdued demand and good availability for liquid product. Lower increases of €70-75/tonne were also heard from a few buyers, but this was not widely confirmed.

One buyer said it had received an increase of €50/tonne for its monthly MA business in November, but it said it had been offered to this for the rest of the quarter as well.

However, this was not confirmed on the sell-side and the buyer said it refused to accept anything beyond monthly, because it hoped to negotiate its prices down in December, taking into account the year-end slowdown.

There was some talk of rollovers being offered for October business only – at the start of the quarter, because fourth quarter discussions were lengthy, as players found it difficult to agree on the magnitude of increase in the fourth quarter, as feed pressure was being weighed against soft market fundamentals. One producer said it had refused to accept any rollover pricing during the fourth quarter.

MA demand into the main downstream unsaturated polyester resin (UPR) sector has been subdued over the last few months and the outlook for November is likely to be similar because of low seasonality and ongoing economic constraints. MA liquid availability remains generally good. 

In production news, one MA plant in central Europe is expected to undergo a brief turnaround in December for around one week.

A catalyst change is likely to take place at Sasol Huntsman’s MA operations at Moers, in Germany over the next few months, although dates have not been disclosed. The company said that the turnaround will be covered and it is likely to coincide with a lower demand period anyway.

The company is also in the process of installing the second flake pastillisation unit at the German site, which is scheduled to be operational in the first quarter of 2013. The new unit will double the company’s flaking capacity from 10,000 tonnes/year to 20,000 tonnes/year and will boost the flexibility between grades.

However, the overall nameplate MA capacity will remain unchanged at 105,000 tonnes/year.

Zaklady Azotowe Kedzierzyn SA (ZAK)’s MA operations in Poland remain down and have been so for the last few months for economic reasons. It is not yet clear when output will be resumed at the site, but will depend on feedstock costs and market developments.

($1 = €0.78)

By: Heidi Finch
+44 20 8652 3214

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