Europe August TDI contract prices stable to softer, say sources

31 July 2013 16:08  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices are being described as stable to lower for August, depending on source, as margin recovery is being weighed against bearish market sentiment, said market players on Wednesday.

Producers and a few other sellers are determined to keep prices steady in August, amid low profitability resulting from substantial price erosion over the last few months, and some said they had already concluded some business at a rollover for August. However, this has not been confirmed on the buy side. One supplier, however, conceded that while it had agreed some mainly rollover business in August, it had also seen some exceptions in eastern Europe, and the Middle East and Africa.

TDI manufacturers are aware of the possibility that the upstream toluene contract price for August may go up and, while they are aware it will be practically difficult to pass on any higher upstream costs into the TDI market during the summer holiday period in Europe in August, they want to stabilise TDI prices. Some producers said they are keen to prepare the ground for proposed increases in September, citing margin recovery and the expected increase in feedstock costs.

However, other players said it is too early to see if September price increases will materialise and will depend on how demand pans out after the summer holidays. TDI demand in the bedding and furniture sectors traditionally picks up after the summer holidays for the next season, but the extent of this will also depend on the economic climate.

For the time being, however, some buyers said TDI prices are likely to be pressured downwards in August, irrespective of feedstocks, stating that long market and low demand remain the overriding factors.

One of the buyers said it would push for a price reduction of €50/tonne ($67/tonne) in August amid bearish market fundamentals. It added that, even if toluene feedstock contract costs were to go up in August, it said that it did not feel that downstream players have been sufficiently compensated by toluene feedstock relief over the last few months.

One seller also reluctantly conceded that “TDI is still under pressure and seems to go further down as it is more dependent on supply/demand rather than feedstock movements.”

The TDI market remains well supplied, and demand remains low for seasonal and economic reasons. Sellers, however, maintain that demand is reasonable for the time of year and not as bleak as suggested by some downstream foam players.

European TDI contract prices were assessed in July at €2,000-2,090/tonne FD (free delivered) NWE (northwest Europe), according to ICIS.This was following a reduction of €30-50/tonne from June.

($1 = €0.75)






By: Heidi Finch
+44 20 8652 3214



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