FocusEurope TDI sellers firm for Oct prices, buyers mindful of demand

24 September 2013 17:57  [Source: ICIS news]

LONDON (ICIS)--At least two European toluene di-isocyanate (TDI) producers are looking for sizeable price hikes in October amid tightened supply and margin recovery, market players said on on Tuesday.

However, buyers are keen to limit increases, if not roll over in some cases, for the sake of downstream demand, sources added. Discussions are underway in most cases and settlements are already heard, albeit in limited cases.

One producer said it was targeting price increases of €120/tonne ($162/tonne) for October and said it had already concluded a number of contracts at €70-100/tonne in Europe. However, there was no buyer confirmation to substantiate this at present.

A second manufacturer said it would push for a price hike of €200/tonne in October, citing the need to recoup lost margins, following higher upstream costs and price erosion for TDI between May and August this year. It strongly ruled out any price rollovers.

Production problems for BorsodChem over the last month and improving export opportunities were also supporting factors for an upward price movement, according to some sellers.

Views on demand are split, depending on the source. However, sellers remain satisfied with domestic demand, and note some recovery in export markets, with one stating that it had sold out for September some time ago. It added that the bedding and furniture sectors were holding up reasonably well, and while the auto sector was soft this was not a significant issue, as the main end-sector for TDI is mattresses and upholstery rather than automotive.  

However, one producer said that sizeable increases will be difficult if all TDI units are up and running running again in October. Chances could improve if this fails to occur, he added.

Buying sources expect that an upward price move is likely in October, although some players do not expect the move to be sizeable. They also pointed out that any increases are likely to be supply rather than demand related, a factor attributed to Borsodchem’s output constraints over recent weeks, as opposed to demand being good.

Buyers maintain that offtake is not where it should be for the time of year. It traditionally enters into peak season in the downstream bedding and furniture sectors during the autumn. However, any seasonal uptick is not really visible, according to buyers, because of ongoing reduced consumer confidence and spending.  

One of the buyers said, “sentiment is definitely firm… demand does not justify an increase, but supply has tightened because of Borsodchem['s situation.] “

Another customer said it is likely to see some modest increases of €20-30/tonne for the lowest prices, but is hopeful that higher prices will roll over. It said that the market cannot accept a considerable upward movement because underlying demand remains fragile. It said there is no chance to pass on any higher prices downstream into the foam sector amid a challenging economic climate and strong competition.

European TDI contract prices were assessed at €2,050-2,100/tonne FD (free delivered) NWE (northwest Europe), according to ICIS. This represents an increase of €30-50/tonne from the previous month.


By: Heidi Finch
+44 20 8652 3214

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