Europe May MDI settles at rollovers, modest price adjustments

22 May 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European monthly crude methyl di-p-phenylene isocyanate (MDI) contract prices have settled with rollovers and price decreases of €30/tonne ($38/tonne) in May, as strong competition and plentiful supply made it difficult for the rise in the upstream May benzene contract price to be passed on, market players said on Wednesday.

European MDI contract prices were assessed in May at €2,060-2,120/tonne FD (free delivered) NWE (northwest Europe), according to ICIS. This represented a rollover at the low-end of the range, and a reduction of €30/tonne at the upper end of the range.

Lower numbers were also heard from the buy-side, but this was not widely confirmed.

By contrast, one producer said it had implemented price increases of €30/tonne for crude MDI in May based on intensified cost pressure, but there was no other market confirmation to substantiate this.

While sellers said that there is an ongoing need to increase crude MDI prices in May for margin recovery reasons, they conceded that it was not possible to pass on these higher upstream costs to crude MDI prices in May. This was because crude MDI supply is good and although MDI demand is reasonable, with some seasonal uptick noticeable, demand was still below expectations for the time of year for economic reasons.

European pure MDI contract prices, by contrast, were stable to slightly firmer in May, with values at €2,230-2,280/tonne FD NWE. This represents a rollover for low-end business and an increase of €20/tonne at the upper part of the range.  Larger price hikes of €50/tonne for pure MDI were mentioned by a few sellers, but this was not confirmed by market others.

This stable-to-firmer sentiment for pure MDI was supported by ongoing short supply, resulting from robust demand in the footwear, packaging and adhesive sectors and a spate of plant outages both planned and unplanned. Pure MDI is mostly affected by output constraints because of its lower yield as a co-product, as well as its limited shelf life.

($1 = €0.78)


By: Heidi Finch
+44 20 8652 3214



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