MDI March contract prices stable to firmer depending on grade

21 March 2013 00:01  [Source: ICIS news]

LONDON (ICIS)--European methyl di-p-phenylene isocyanate (MDI) contract prices are stable to firmer in March, depending on grade, as margin recovery was weighed against differing market fundamentals, sources said on Wednesday.

Crude MDI contract prices rolled over from February at €2,030-2,150/tonne FD (free delivered) NWE (northwest Europe), with selective increases of €20-50/tonne largely incorporated within the existing range.

MDI sellers said that there is an underlying need to increase prices as soon as possible to recoup margins, but their main focus is on April – with the renegotiation of quarterly and monthly contract business.

Buyers confirmed price rollovers for crude MDI in March, stating that there was no justification for any higher prices amid fragile downstream demand and good availability.

Two crude MDI buyers did not rule out the possibility of price increases of €20/tonne in northwest Europe and up to €50/tonne in the Mediterranean in March, but these price adjustments were seen to be more exceptions rather than the norm.

Pure MDI contract prices increased by €20-30/tonne on average, taking values to €2,200-2,240/tonne in March, driven by ongoing short supply.

Looking to the second quarter, sellers are firm on price hikes of €100-200/tonne, citing the need to recoup lost margins. They also suggest that the crude MDI supply is likely to tighten in the second quarter, based on a number of output constraints and the expected seasonal uptick in demand.

Buying sources, however, said they considered proposed price hikes of €100-200/tonne unrealistic, with a few stating that any upward move is likely to be capped at €50/tonne because they see seasonal demand being weighed down by ongoing economic constraints.

One main crude MDI buyer suggested that it would be difficult for sellers to keep prices stable, let alone implement increases, in view of downstream demand being fragile.

One buyer said it had already concluded some crude MDI business for April at a rollover. However, this was not confirmed on the sell-side.

Crude MDI consumption is reasonable to slow in the downstream building sector, with little evidence of a seasonal uptick because of extended winter weather conditions and ongoing economic constraints. However, players remain hopeful that there will be a seasonal improvement in demand over the next few months, weather permitting.

The crude MDI market is well supplied, despite some output constraints, both planned and unplanned, because demand remains modest. 

Pure MDI supply remains tight, driven by seasonally good downstream demand and the output constraints, since it is a bi-product in MDI manufacturing.

In production news, Dow Chemical’s MDI operations at Stade, Germany, which has capacity to produce 200,000-220,000 tonnes/year, remain at reduced operating rates.

This is likely to continue until scheduled maintenance has been carried out at its upstream aniline facility at another site in April. MDI output at the Stade site has been restricted since the fourth quarter of 2012.

Previous reports suggested that BASF’s MDI facility in Antwerp, Belgium, which has a nameplate capacity of 560,000 tonnes/year and is the largest MDI unit in Europe, has been running at reduced operating rates since February for upstream reasons, and this is likely to continue until the end of March.  BASF did not immediately respond to a request for comment.

Planned maintenance is underway at Huntsman’s MDI operations at Rozenburg in the Netherlands, a company source said on Monday.

The turnaround started as planned last Friday, and it affects both MDI units. It is likely to last around four weeks.

MDI operations at Rozenburg are estimated at 400,000 tonnes/year, according to ICIS plants and projects.

By: Heidi Finch
+44 20 8652 3214

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