Price and market trends: Europe MDI contracts steady in June on cost relief, seasonal demand

21 June 2013 09:58  [Source: ICB]

One buyer says material is ample, despite Huntsman extending a force majeure at its site in Rozenberg, Netherlands

European crude methyl di-p-phenylene isocyanate (MDI) contract prices have largely rolled over into June because of limited change in upstream benzene feedstock costs and a modest seasonal pick-up in demand, market players said on 12 June.

Price reductions of €10-20/tonne for crude MDI in June were heard in a few cases in parts of Europe, but this was seen to be more an exception than the rule. Crude MDI contract prices were assessed steady for June at €2,060-2,120/tonne ($2,747-2,827/tonne) FD (free delivered) WE (west Europe).

Most monthly crude MDI business had been booked for June prior to news of US-headquartered Huntsman extending a force majeure to include standard crude MDI and associated products from its Rozenburg site in the Netherlands.

This follows Huntsman's earlier declaration of force majeure on pure MDI and MDI-based variants in the second half of April.

Buying sources, however, remained unfazed, saying the crude MDI market was already long amid lacklustre demand, prior to the extension of Huntsman's force majeure declaration.

Sellers said they had seen some additional demand related to Huntsman's supply restrictions, however, and one of the suppliers conceded it would struggle to accommodate many enquiries amid its own strict inventory management.

One of the suppliers said it has secured some spot crude MDI business for June at increases of €30-50/tonne, amid less overall availability in the market. There was no market confirmation to substantiate any higher price levels at present.

In fact, one buyer ruled out any chance of price increases, stating that material was ample despite Huntsman's supply problems because demand was not sufficient to substantiate any price increases.

A few buyers said they would continue to push for lower numbers over the next month based on lacklustre demand.

Crude MDI demand into the downstream construction sector is normally in high season over the summer months, but players maintain that while there has been some seasonal pick-up, demand remains below that of the same period last year. This is because of ongoing soft macroeconomic conditions.

Pure MDI contract settlements for June largely remain steady at €2,230-2,280/tonne FD WE, despite some selective increases of €10-30/tonne. The general view was of a mix of rollovers and price increases in June - depending on what had been done in May.

By: Heidi Finch
+44 20 8652 3214

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