Europe MA producers mull triple-digit hikes for Q4 contracts

27 September 2013 23:59  [Source: ICIS news]

LONDON (ICIS)--European maleic anhydride (MA) producers said on Friday that they expect to target substantial increases for Q4 liquid MA contracts.

Sellers indicated likely price targets of plus €100-200/tonne, based on constrained supply and higher feedstock costs. Buyers said they would not support price increases of this size.

Q3 contract prices for liquid MA were assessed by ICIS at €1,700-1,800/tonne ($2,297-2,432/tonne) free delivered (FD) northwest Europe (NWE).

One producer said it had received an offer from a reseller for imported tonnes at a price that represented an increase of €80/tonne from the third quarter.

The source noted that n-butane prices have increased by €50/tonne over the past couple of months and said it would target Q4 contract price increases of €100/tonne or more to restore its MA production margins.

The producer said that lack of supply means it can sell liquid tonnes on the spot market at €1,650/tonne FD.

A second producer said it is receiving numerous enquiries for fourth-quarter deliveries, and is considering whether to seek Q4 contract price increases of €150-200/tonne.

The source said average spot prices for liquid tonnes are now around €1,620/tonne FD, having fallen by some €20/tonne. The producer noted that a more balanced market could emerge towards the end of October.

A reseller concluded its price for October liquid MA deliveries at €1,500/tonne FD. The source acknowledged that a small rise in Q4 contract prices might be unavoidable, but said it would aim for rollovers based on adequate availability and the expectation of lower feedstock costs.

A second reseller said that the market is no longer quite so tight, although prices are still around €1,580-1,620/tonne FD southern Europe for October delivery.

A southern European buyer said its suppliers are targeting a rollover for October prices, but it is hoping for a reduction based on improved availability. The source had agreed a price in the high €1,500s/tonne FD for September deliveries.

Another consumer observed that the peak demand season from the unsaturated polyester resin (UPR) sector has ended, and MA offtake is therefore unlikely to improve.

A third buyer said its requirements are fully covered and demand in the market is starting to decline, a month earlier than usual.

Given that the fourth quarter traditionally sees low demand, and n-butane prices should start to fall, the buyer suggested that producers consider reducing their prices to support offtake.

A fourth buyer said that some suppliers are targeting significant Q4 price increases, while others are being more conservative. The source said that supply is short and imports are limited, but the impact is negated by lacklustre demand.

Sellers' price targets are consequently not in line with its expectations, the source said, adding that it had been offered liquid spot tonnes at €1,500/tonne FD.

Spot prices were assessed at €1,550-1,620/tonne FD NWE for liquid tonnes and €1,740-1,800/tonne FD NWE for flake material on Friday.

European MA producers include Sasol-Huntsman, Polynt, DSM, MOL and CEPSA.

($1 = €0.74)

By: Samuel Weatherlake
+44 20 8652 3214

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