Europe Feb polyol prices roll over despite higher upsteam costs

06 February 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European polyol contract prices have largely rolled over into February, despite higher upsteam propylene costs in February, because of a well-supplied market amid modest downstream demand, said market players on Wednesday.

European polyols contract prices remain steady in February at €1,770-1,870/tonne ($2,391-2,527/tonne) FD (free delivered) NWE (northwest Europe) for slabstock conventional flexible grades and €2,010-2,080/tonne FD NWE for sucrose base rigid grades, according to ICIS.

Sellers stressed the underlying need to increase polyol prices and achieve re-investment economics, following several months of high upstream propylene costs. However, buyers maintained that there was no room to increase prices amid lacklustre downtream demand and good supply.

Both buying and selling sources also agreed that the €10/tonne increase in the upstream propylene contract price in February was not significant enough to have any effect on polyol prices in February, particularly in view of the modest decrease in upstream costs in January.

While buying and selling sources confirmed a rollover as the general price trend for flexible and rigid grades in February. One seller said that it had secured mainly rollovers, but has also accepted minor increases for low-end business for flexible polyols in a few cases - although the latter was considered an exception rather than the norm.

By contrast, there was some talk of price reductions for flexible polyols in February in a few cases amid strong competition from certain sellers in northwest Europe and eastern Europe, but this was not widely confirmed.

Flexible polyol demand in the downstream bedding and furniture sectors remains satisfactory, but could be better for the time of year – which is traditionally a healthy period.

However, players said that soft macroeconomic conditions continued to limit consumer confidence and spending on certain end-user sectors.

Rigid polyol consumption in the downstream construction sector remains slow in line with low seasonality, along with some underlying economic limitations, which continues to dampen activity in southern Europe among other parts of Europe.

The polyols market is largely described as balanced to long, as any output problems, the disturbance at the Oltchim site in Romania or forthcoming turnaround preparation for two main suppliers, are being outweighed by subdued downstream demand. 

In manufacturing news, Dow Chemical’s polyol operations in Terneuzen, the Netherlands, are due to undergo routine maintenance starting in mid-March and will last for around one month.

There has been market talk that Shell Chemical’s polyol facility in Pernis, the Netherlands, is also likely to undergo planned maintenance at the end of the first quarter or in the second quarter. However, this has not been confirmed at source.

($1 = €0.74)

By: Heidi Finch
+44 20 8652 3214

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