27 March 2013 17:16 [Source: ICIS news]
LONDON (ICIS)--European polycarbonate (PC) quarterly contract prices are likely to increase by €0.10-0.15/kg ($0.13-0.19/kg) in the second quarter because of high raw material costs and poor margins, sources said on Wednesday.
Producers have been firm with their offers and are not willing to roll prices over in an effort to improve margins. Although their initial €0.20-0.25/kg targets may not be achieved, hikes of €0.10-0.15/kg are possible.
As a result, buyers have started to pre-buy ahead of the second-quarter contract settlements to save a few cents. According to producers, March has shown an improvement in sales and they were able so far to increase prices by €0.10-0.14/kg.
One producer has given the option to its customers to spread the increases over three months, with monthly hikes of €0.05/kg from March to June, to help ease the pressure on buyers.
The European market has been described as more balanced so far in 2013 than it was in 2012, and the length in the market is not currently so obvious.
All major European producers have been targeting increases since the beginning of March. They are adamant they will pass on the targeted increase, or something in that range, in order to improve margins.
Demand from the automotive industry is sluggish because car sales are poor. This has resulted in rollovers in the price of PC for most car producers.
The outlook for the rest of 2013 is more positive than it was for the second half of 2012, although it is still questionable whether producers will be successful in clawing back all the margins they have lost in the past 12-16 months due to feedstock cost increases and weak demand.
($1 = €0.78)
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