Europe TDI contract prices likely to be fairly steady in July

26 June 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--Initial price ideas for European toluene di-isocyanate (TDI) contracts for July are fairly steady on the back of some stabilsation in demand, which remains at a low level, and overall good supply, albeit with a few exceptions, said market players on Wednesday.

TDI suppliers are looking to keep prices steady in July, for margin reasons following sharp price drops over the last few months.

TDI contract prices have dropped by €140-150/tonne ($184-197/tonne) between April and June 2013, taking values to €2,050-2,120/tonne FD (free delivered)  NWE (northwest Europe) in June, according to ICIS price history.

One supplier said it has already concluded its TDI business for July at a rollover. However, this was not widely confirmed in the market.

Buyers expect TDI prices to roll over or reduce in July, amid ongoing weak downstream demand and overall good supply. A few buyers said they consider stable prices to be most realistic in July, as they expect little change in price or market fundamentals over the summer holiday period.

Another buyer, however, said it was keen to push for lower TDI prices in July, but said its attempts were being resisted by one supplier so far, who remained firm on a price rollover, on the back of its recent output constraints.

The same buyer said it would only conclude business for a month and would not enter into a bi-monthly agreement valid for July and August expecting there to be a possibility of price reductions in August, and this was echoed by another consumer. This was attributed to August being a typically a quiet month because of the summer holidays.

TDI consumption in the main downstream bedding and furniture sectors remains weak because of low seasonality and ongoing economic uncertainty, which continues to limit consumer confidence and spending.

TDI demand into the mattress and upholstery sectors has been softening during the second quarter of 2013, with year-on-year estimates showing reductions of 10-15% on average or as much as 20-25%, depending on the player and region.

However, some players suggest that demand is not slipping any further, but is stabilising at this level, which is below the same period last year.

Overall European TDI supply remains good amid subdued domestic demand and a lack of attractive export opportunities to the Middle East and Africa. By contrast, a few sellers, have lower availability than others because of a combination of recent output constraints or forthcoming maintenance plans.


By: Heidi Finch
+44 20 8652 3214

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