Europe crude MDI contracts likely to be stable to softer in July

26 June 2013 15:54  [Source: ICIS news]

LONDON (ICIS)--Initial prices ideas for European crude methyl di-p-phenylene isocyanate (MDI) contracts are likely to be steady to softer in July, said market players on Wednesday.

This is because modest demand and expected softening in the July benzene feedstock contract price are being weighed against output and supply constraints for a few MDI suppliers.

Sellers are keen to keep crude MDI contract prices steady amid fairly balanced market conditions. One producer said it expects a price rollover on the back of reasonable demand and what it expects to be limited change in feedstock costs. However, the latter has not been widely confirmed.

Crude MDI buyers, however, are pushing for price reductions on the back of downward feed pressure and good availability, despite output and supply constraints for a few sellers, which they attribute to lacklustre demand. A few buyers said they have already secured price decreases of €40tonne ($53/tonne) and as much as €90/tonne, but this was not confirmed on the sell side.

Crude MDI consumption in the downstream construction sector has shown some seasonal improvement, albeit limited, because of ongoing economic constraints. The downstream automotive sector also remains soft, affected by poor macroeconomic conditions. By contrast, the appliances sector continues to hold up reasonably well.

For pure MDI, prices are likely to remain fairly steady in July, as some slowdown in downstream demand from the footwear sector is being counterbalanced by some residual supply limitations. The latter is linked to a spate of recent output constraints, which pure MDI is most sensitive to because of its lower yield in MDI manufacturing. A few buying and selling sources said they had already agreed to price rollovers for pure MDI in July. One supplier said it is looking to increase its pure MDI prices by €20-30/tonne because of ongoing limited supply.

European MDI contract prices in June were assessed at €2,060-2,120/tonne FD (free delivered) NWE (northwest Europe) for crude MDI and €2,230-2,280/tonne FD NWE for pure MDI, according to ICIS. 

($1=€0.76)


By: Heidi Finch
+44 20 8652 3214



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