Europe MDI contracts mainly steady in October, Q4

23 October 2013 18:13  [Source: ICIS news]

LONDON (ICIS)-European methyl di-p-phenylene isocyanate (MDI) contract prices have largely rolled over into October and the fourth quarter, although some price increases were also heard, market players said on Wednesday.

European October contract prices remain steady at €2,020-2,100/tonne ($2,767-2,877/tonne) FD (free delivered) W Europe for crude MDI and €2,230-2,280/tonne FD W Europe for pure MDI, according to ICIS. The price range only refers to monthly contract business.

Some sellers had attempted to increase prices across the board in October and the fourth quarter, citing the need for margin recovery and balanced-to-tight supply, resulting from a spate of output constraints. However, they were met with strong buyer resistance amid reasonable-to-modest demand and sufficient supply.

Some sellers said they had largely implemented price rollovers, albeit with some price rises of €20-30/tonne.  

A few of the suppliers pegged the range higher at €2,040-2,050/tonne  FD W Europe and up to €2,120/tonne FD W Europe. However, there was insufficient market confirmation to substantiate the higher levels.

One manufacturer said it had passed on price increases of €50/tonne for its MDI contract business in October.

However, another producer said it had kept its MDI prices stable for its monthly business in October, which remained the majority of its contracts, although it noted a similar stable pricing trend for its bi-monthly and quarterly business. It agreed that the existing  price ranges remained valid.

Buyers confirmed that prices were largely steady in October and the fourth quarter for the most part, as supply remained sufficient and demand although steady, remains at a modest level for economic reasons. They also said that any general upward price movement was unlikely in view of the fact that demand from the main downstream construction sector heads into low season during the fourth quarter. One large volume consumer did not rule out the possibility of price increases for smaller volume consumers, but this was not widely confirmed.

One crude MDI buyer said it had received a sizeable price reduction for the fourth quarter, as suppliers sought to retain its business. It  quoted its invoiced price at below €2,000/tonne FD W Europe, but it was not disclosed if this was representative of discounted or pre-discounted levels.   

Prices below the ranges were heard from a few other buyers, but this was for discounted rather than pre-discounted levels. The ICIS range reflects pre-discounted business only.   

Looking to November, one producer said it would look for minimum price increases of €30/tonne, citing balanced-to-tight supply and margin recovery.

However, buying and other selling sources expected price rollovers to be more realistic, stating that they had not been adversely affected by production constraints at one main plant because demand is satisfactory and expected to seasonally slow during the fourth quarter.

There was talk that some buyers may push for price decreases for MDI if the bearish sentiment continued in the upstream benzene market,  although players generally agreed that MDI prices are mainly market rather than feedstock driven.

In production news, BASF’s MDI facility at Antwerp in Belgium remains at reduced operating rates, and this is expected to last until the end of this week, because of continued feedstock constraints. The reduced output started in mid-October.

($1 = €0.73)

By: Heidi Finch
+44 20 8652 3214

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