12 December 2012 23:59 [Source: ICIS news]
LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices in December have been agreed stable to softer as ongoing high toluene feedstock costs are offset against low demand and good supply, market players said on Wednesday.
There were price reductions of €10-30/tonne ($13-39/tonne) in December in some cases – typically for low-end business amid intensified competition among certain sellers, who wanted to shift some volumes at year-end.
For high-end business, rollovers were largely reported, although there were some downward price adjustments in a few cases.
The TDI range for December has been assessed at €2,210-2,280/tonne FD (free delivered) NWE (northwest Europe), according to ICIS. This represents a reduction of €30/tonne at the low-end and a rollover at the upper part of the range.
There were larger price reductions, of €40-100/tonne, in a few cases but they were not seen to reflect the general market trend.
Numbers below the range were also reported in one or two cases, but they were not widely confirmed and some sources suggested that they were reflective of spot rather than contract business.
TDI demand into the main bedding and furniture sectors is slowing at year-end for working capital reasons and because of the forthcoming downstream plant closures over the Christmas and New Year holiday period.
However, the general view was that demand was holding up better in eastern Europe rather than in northwest Europe, because of longer downstream plant closures in northwest Europe. Also, underlying growth potential in the emerging eastern European market when compared to the more mature northwest European market.
TDI supply is described as good, with no reports of any availability problems.
A few producers had tried to increase their TDI prices in December because of the need to restore margins amid ongoing high toluene costs. However, these attempts had been unsuccessful in December amid the year-end slowdown.
Instead, sellers are looking to the early part of the first quarter 2013 to increase prices and recoup lost margins. Firm targets were not yet disclosed, although there was some talk of producers looking for hikes of €150-200/tonne.
The exact timing of the possible increases were not yet defined and could either be in January or February, depending on source and how demand pans out.
Buying sources, by contrast, consider price reductions to be more realistic in January, as they require some compensation for the lower toluene feedstock costs over the last few months-particularly if the price downtrend continues and provided availability remains good.
Buyers said that news of the reduction in the toluene contract price in December came too late to have an effect on December TDI contract prices, but they expected this to filter through into their January TDI business.
They said that the only chance of higher TDI prices in January could be if upstream costs were to move up and/or if there are any plant reliability issues.
($1 = €0.77)
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