Europe March TDI contract prices largely stable, selective rises

13 March 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices have largely rolled over into March, as high upstream toluene costs, despite some slight relief over the last few months, were being offset by fragile demand and good availability, market players said on Wednesday.

The TDI price range in March remains steady at €2,200-2,260/tonne ($2,857-2,935/tonne) FD (free delivered) WE (west Europe), according to ICIS. 

Price increases of €20-30/tonne were reported by a few sellers in March, but there was insufficient market confirmation to substantiate it as a general market trend.

One producer said it had increased its low-end business by €20/tonne, taking minimum values to €2,220/tonne FD in Europe, but this was not confirmed by others.

Another seller said the majority of its TDI business remained steady in March, albeit with a few slight upward price adjustments for lower priced accounts, which brought them into alignment with the rest of the market.

Higher numbers of €2,300/tonne FD were heard on the sell-side in March, but these were seen to reflect values in eastern rather than western Europe.

Looking ahead, sellers are determined to raise TDI prices as soon as possible and recoup lost margins. They said increase attempts in the first quarter had been largely unsuccessful and were keen to re-target previous hikes of €100-200/tonne effective 1 April for the second quarter.

Buyers, however, are set to strongly resist higher prices, stating a tough downstream environment will make any upward price movement difficult.

Views on TDI consumption remain mixed, depending on source. Buyers maintain that demand is lower than expected compared with one year ago because of ongoing economic constraints impacting consumer confidence and spending in main end-user sectors such as bedding and furniture.

One customer said that on top of economic factors, poor weather conditions over the last few months has also reduced activity in the downstream upholstery and mattress sectors.

Sellers, by contrast, said demand remains fairly solid and they have not seen any impact on their domestic volumes, despite some bearish sentiment from certain downstream players.

TDI domestic availability remains good, with no reports of any production problems in Europe. One TDI manufacturer, however, said it is running at reduced operating rates for margin reasons. Another TDI seller had suggested the TDI market could tighten over the coming weeks because of good exports opportunities to the Americas, because of production problems in the region, as well as to the Middle East and Africa-which is the traditional export region for Europe.

A few sellers also said there were fewer imports available in Europe – thought to be due to some disruption to inter-regional transfers. Buyers, however, said they had not seen any supply problems, despite the stopped production of Poland-based Zachem’s TDI at the end of 2012, stating that it was being well covered by others - amid spare capacity in Europe which could be utilised, some import volumes and the fact that demand remains low.

($1 = €0.77)

By: Heidi Finch
+44 20 8652 3214

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