27 September 2013 10:16 [Source: ICB]
European methyl di-p-phenylene isocyanate (MDI) contract prices have largely rolled over into September because of mixed contract types and sufficient supply despite some output constraints, although some sellers did report increases, market players said.
European September contract prices were assessed steady at €2,020-2,100/tonne ($2,693-2,800/tonne) FD (free delivered) NWE (northwest Europe) for crude MDI and €2,230-2,280/tonne FD NWE for pure MDI.
Sellers were keen to increase monthly MDI contracts based on the higher upstream September benzene contract price and the need to recover lost margins, as well as a balanced-to-tight market which was attribute to some output limitations and good order intake.
Some suppliers said they had implemented price increases in September of €30-50/tonne for crude MDI and €20-80/tonne for pure MDI.
However, some sellers acknowledged that rollovers were also available in September. On top of this, there is a mix of quarterly and monthly business for crude MDI, which has meant a proportion of prices will be fixed for the remainder of the quarter.
One producer, which had mainly quarterly MDI business, said it would push for price increases for most of its orders in October – with the re-negotiation of quarterly and monthly accounts.
A few producers, which had mainly monthly MDI business, said they had passed on increases of €30-40/tonne and €30-50/tonne respectively in September. However, one of the sellers conceded that its increases were selective. It had quoted its crude MDI prices €30/tonne higher, which equated to €2,050-2,130/tonne FD.
The same source had considered the pure MDI range to be too narrow, stating that its prices were between €2,260-2,350/tonne, although it conceded that €2,350/tonne was rare. However, there was no other market confirmation to substantiate these higher levels.
In fact, a few other suppliers said they had seen some increases, but despite this they acknowledge that price ranges remain fairly steady.
Crude MDI numbers down to €1,820/tonne FD were reported from one consumer in September, albeit on a net rather than gross basis. This was not included in the published range because ICIS methodology refers to gross values only.
One trader said it had passed on price increases of €80/tonne to its pure MDI customers in September, citing feed pressures and output constraints for certain players. However, it conceded that its September prices remain within the existing price range, albeit at the upper end. It added its prices had been below the range in August.
Buyers were generally resistant to any price increases in September and reported rollover pricing, stating there was no significant change in upstream benzene costs and supply remained sufficient, despite a series of output constraints for main players. They attributed the latter to demand being flat to modest for economic reasons.
One buyer said it had secured price reductions for crude MDI from its domestic and import suppliers, but this was for early settlements agreed back in mid-August. Price reductions were not heard from any other market players.
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