Europe Jan TDI contracts assessed lower, some rollovers reported

16 January 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices were largely reported lower in January, because of modest-to-reasonable demand in northwest Europe and good availability, market players said on Wednesday.

Players generally reported a mix of rollovers and average reductions of €10-20/tonne (|$13-27/tonne) in January, but in terms of absolute numbers, prices were largely confirmed lower at €2,200-2,260/tonne FD WE (west Europe), according to ICIS.

This represented a reduction of €10-20/tonne. Rollovers were largely incorporated within the range. Larger price reductions of €30/tonne were also reported in January, but they were not widely confirmed.

Producers had initially targeted increases of €50-150/tonne for January and the first quarter because of high toluene cost pressure and the need to recoup lost margins.

However, buyers strongly resisted any upward price move, stating that demand was not strong enough to support an increase. Good availability also added to the bearish sentiment. 

One TDI manufacturer said it had originally targeted an average increase of €50/tonne for January, but had compromised at a rollover. The source said it had refused to accept any lower prices in January but instead had achieved some selective increases. However, there was no other market confirmation to substantiate this.

TDI in the main downstream bedding and furniture sectors remained modest-to-reasonable, according to buyers. They said that restocking in January remained limited because of the on-going economic climate and it was too early to see how underlying demand would pan out.

Sellers, however, were more positive, stating that demand in January was reasonably good – supported by restocking activity after the holidays and good export opportunities to Latin America, although exports to the Middle East and Africa were not as attractive as in recent months.

Sellers acknowledged that demand in northwest and southern Europe was flat. However, they pinpointed particularly good activity in eastern Europe and Russia because of growth potential in the emerging markets when compared with the more mature northwest and southern European markets.

Overall TDI supply remains good, despite Zachem, a subsidiary of Polish state chemicals manufacturing group Ciech, stopping its production of TDI in the second half of December, because demand remains modest. The closure of the 75,000 tonne/year TDI unit in Bydgoszcz, Poland, is thought to have resulted from the recently announced deal between Ciech and Germany-based BASF for the sale of Zachem’s TDI business.

Looking ahead, TDI producers are gearing up for possible increases of €100-200/tonne to be implemented from February until the end of the first quarter, in the search of margin recovery.

Buying sources, however, said any upward price move was unlikely unless demand were to pick-up in a meaningful way. TDI offtake in the downstream bedding and furniture sectors is traditionally healthy in the first quarter until the early part of the second quarter, although it remains to be seen if this pattern materialises this year.

($1 = €0.75)

By: Heidi Finch
+44 20 8652 3214

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