Europe perc producers seek price increases on tightening supply

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

LONDON (ICIS)--European perchloroethylene (perc) producers said on Tuesday that they hope to achieve higher prices on expectations of reduced availability in the coming months.

This would represent a reversal of the downward price trend that has dominated the market since mid-2011. Demand has picked up since the beginning of the year, but availability remains good.

A producer that is targeting March hikes of €60/tonne ($78/tonne) emphasised that recent price increase announcements of 9 cents/lb ($198/tonne, €152/tonne) in the US are creating favourable conditions for price increases in Europe.

The source described good demand, observing that high consumption season for applications such as refrigerants and dry cleaning is approaching.

Another producer said it is planning to seek price increases, based on low chlorine production rates.

However, the source acknowledged that customers might not accept the need for increases, noting that long-term consumption trends are negative in Europe. This is encouraging suppliers to protect their share of the market, the producer explained.

A third producer said last week that it had managed to raise prices slightly during the first quarter, but the overall trend had been fairly stable.

The source said it needed to improve its margins, but described the market as "a mess". The producer had previously been confident that it would be able to secure price increases.

In the US, buyers and producers said last week that price-increase nominations from Dow Chemical, OxyChem and PPG Industries for 9 cents/lb were starting to find traction in the market because demand from the refrigerant liquids market was increasing.

Dow Chemical has imposed order controls on perc from its plant in Stade, Germany, in preparation for a five-week maintenance turnaround that will begin in early April, a company source said. The outage will be held in parallel with a shutdown at the associated chlor-alkali plant.

The source noted that maintenance will begin at the producer's plant in Louisiana, US, in June, which will necessitate exports from Europe to cover the lost output. As a result, the source said it expects global supplies to be tight until the third quarter.

The Stade perc unit has a nameplate capacity of 100,000 tonnes/year, according to ICIS data.

Domestic spot prices were assessed on Tuesday at €970-1,020/tonne FD (free delivered) NWE (northwest Europe) and €935-980/tonne FD Med (Mediterranean).

Spot prices peaked in mid-2011 at €1,500-1,650/tonne FD NWE and €1,380-1,480/tonne FD Med.

Perc is used in several applications, the principal ones being dry-cleaning and metal-cleaning. European producers include Dow, Solvay, Anwil and Spolchemie.

($1 = €0.77)

By: Samuel Weatherlake
+44 20 8652 3214

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