Europe MDI sellers bullish on Oct targets, buyers resistant on demand

25 September 2013 17:48  [Source: ICIS news]

LONDON (ICIS)--European methyl di-p-phenylene isocyanate (MDI) producers are mainly pushing for price increases for October and the fourth quarter of 2013, on the back of margin recovery and a spate of output constraints, market players said on Wednesday.

However, buyers are resisting this amid sufficient supply and flat demand, sources added.

One producer said it would push for price increases in October, although targets were not disclosed. This was following its implementation of selective rises in September. Its firm pricing stance is attributed to its low stock position, resulting from output limitations.

A second manufacturer said it is looking for price hikes of €100/tonne ($135/tonne) and said it had already concluded some initial October business at plus-€70/tonne.  However, there was no other market confirmation to substantiate this at present.

The source said its firm stance was a due to short supply and below-target margins. It considered any rollover pricing to be unacceptable.

A third producer said it would look for a firm rollover as a minimum, but said there was definite need to raise prices to recoup lost margins.

Sellers maintain that demand for crude MDI in the main downstream construction sector is holding up reasonably well for the time of year, and there is some feeling that this could continue, if autumn weather remains mild.

Pure MDI demand is ticking over, although one producer conceded that this is more supply- rather than demand-related. Pure MDI traditionally picks up at the end of the year and in the first few months of the following year.  

Buying and trading sources considered that rollovers or modest increases for monthly MDI business in October may be possible, stating that supply is sufficient, despite a string of output constraints, and demand is reasonable but not great.

One customer said it had an early settlement for crude MDI at a rollover, which it has accepted. One pure MDI trader said it has agreed to an increase of €40/tonne on its purchase price in October, supported by some supply constraints and recent cost pressure. Other buying and reselling sources believe that there is likely to be some variation in October settlements. Rollovers and increases of up to €30-50/tonne could be achievable, depending on supply position of player, sources added.  

One crude MDI buyer, who has quarterly business said it would  look for price reductions despite a bullish producer stance, stating that supply is sufficient to meet demand and demand is likely to slow in the fourth quarter amid low seasonality.

European contract prices in September were assessed at €2,020-2,100/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=€0.74)


By: Heidi Finch
+44 20 8652 3214



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