06 September 2013 15:01 [Source: ICIS news]
LONDON (ICIS)--European and Turkish annual soda ash contract negotiations have got under way and market participants expect a rollover or a small decrease of €3-5/tonne ($3.95-6.58/tonne) depending on location and origin.
Producers will try to increase prices where possible, arguing that energy and production costs are high and they need to improve margins. However, consumers will resist any attempt to increase prices and will bid for reductions because the market is long and demand is not likely to improve in 2014.
A western European buyer said that its suppliers are offering price increases but it has not committed to anything yet and will definitely resist any hikes because they are not justified. It said that coal and energy prices have stayed more or less stable or dropped on some occasions and feedstock costs have stayed relatively stable too, which means a rise in prices is not justifiable.
A trader in southern Europe said that market fundamentals have not been affected by the shutdown of Solvay's soda ash plant in Portugal earlier this year as the company has ramped up production at its other sites that are now supplying Spain and Portugal.
The trader said that most of its key accounts have asked to settle contracts earlier than usual because they want to ensure price stability for next year.
An eastern European producer said that its customers are bidding for reductions but as yet it would be difficult to predict the outcome of negotiations as they are still at an early stage.
A western European manufacturer expects tough negotiations for next year's contracts but as usual producers will look to maintain prices and any reduction greater than €5/tonne is unlikely.
($1 = €0.76)
Follow Janos Gal on Twitter @janosgalICIS
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