Europe November flexible polyols post stable-to-limited decreases

16 November 2012 09:29  [Source: ICB]

Main downstream sectors show more buoyancy in eastern Europe than to the west

European flexible polyol contract prices have rolled over in a number of cases into November, albeit with limited decreases of around €10/tonne ($13/tonne) for some low-end accounts, market players said.

Although the general price trend was for stability in November, a few producers conceded that they had to give some limited decreases to certain accounts because of the relief in upstream costs.

In terms of absolute numbers, the flexible polyol range was largely confirmed at €1,780-1,910/tonne FD (free delivered) NWE (northwest Europe). This represents a reduction of €10/tonne at the low-end and a rollover at the upper part of the range. Numbers down to €1,770/tonne FD and up to €2,000/tonne FD for flexible polyols in November were also heard, but were not widely confirmed.

Flexible polyol demand in the main downstream mattress and upholstery sectors in northwest Europe is stable, albeit at a modest level, with little-to-no evidence of any peak seasonal demand this year because of ongoing economic constraints.

In eastern Europe, however, demand continues to hold up reasonably well, buoyed by underlying growth potential and less of a pronounced slowdown at year-end than in northwest Europe.

The flexible polyols market is generally well-supplied, with a few exceptions, but these are being sufficiently covered by others.

Rigid polyol prices have rolled over in November at €2,010-2,100/tonne FD NWE. This is because of the mix of monthly and quarterly contracts, which means that any price changes are difficult to implement during the quarter. Rigid polyol prices are also less affected by olefin feedstock volatility, which - along with fairly balanced market conditions - is contributing to the general price stability.

Rigid polyol demand into the downstream construction sector is ticking over, although there are some signs of seasonal and macroeconomic-related slowdowns.

In manufacturing news, Dow Chemical's rigid polyol operations at Terneuzen in the Netherlands will undergo planned maintenance in the second half of November for around ten days. This follows staggered maintenance at the rigid polyol operations, which have taken place one week per month in September and October, respectively.

Oltchim's upstream propylene oxide (PO) and polyols operations at Romania remain off line, but are expected to restart in the second half of November. The operations have been down since August 2012 for maintenance and economic reasons.

The Romanian government recently announced it plans to begin negotiations with local banks to secure a loan of around €10m to enable it to resume activity at majority state-owned Oltchim. The company has recently restarted its liquid caustic soda facility - the first of its units to resume output.

Production at Oltchim has been severely restricted for more than a year as a result of a lack of working capital to secure feedstock supplies.

By: Heidi Finch
+44 20 8652 3214

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