Europe November MDI price ideas stable - rises, drops also heard

30 October 2013 14:12  [Source: ICIS news]

LONDON (ICIS)--European methyl di-p-phenylene isocyanate (MDI) contract price ideas are largely stable, as some output constraints are being weighed against the looming seasonal slowdown in crude MDI demand and lower price expectations for benzene feedstock, said market players on Wednesday.

Nevertheless, price increases and price reductions for MDI have also been heard.

Some selling sources said that, while there is an underlying need to increase prices to attain margin improvements, they acknowledged that it would be difficult in November and they considered price rollovers to be more realistic for crude and pure MDI. They attributed this to the seasonal slowdown in crude MDI demand from the main downstream construction sector during the fourth quarter and little to no signs of any seasonal pick-up for pure MDI, as well as sufficient supply for the most part.

One producer said it would look for increases of €30/tonne ($41/tonne) in November, citing balanced to tight supply, resulting from output constraints for a few main players.

The same source said it had already concluded some November MDI business with rollovers to increases of €20-30/tonne, depending on starting point. There is, however, no buyer confirmation to substantiate any price increases at present.

Views on November price ideas from buying sources are mixed between rollovers and price reductions. Some buying sources expect rollovers, as output constraints for a few sellers are being counter-balanced by their competitors. There is also steady demand, at least for the time being, albeit with the prospect of an imminent seasonal downturn in crude MDI activity, as soon as the temperatures drop.

A few buying sources for crude and pure MDI, however, said they have either already achieved price reductions or are pushing for them for November, amid sufficient-to-good availability, slowing demand and feedstock relief in October, and the likelihood that this could continue into November. Price reductions, however, were not confirmed on the sell side.

On top of monthly contract business, there are also some bi-monthly and quarterly accounts for crude MDI, which means that these prices will roll over into November.

The crude MDI market is largely balanced by most players, although there is talk of low stocks for certain sellers amid continued output constraints. The pure MDI market, however, remains balanced to tight, as it is generally more affected by production limitations because of its lower yield in the MDI manufacturing process when compared to crude MDI, and its limited shelf life.

European October contract prices were assessed stable at €2,020-2,100/tonne FD (free delivered) WE (western Europe) for crude MDI and €2,230-2,280/tonne FD WE for pure MDI, according to ICIS. Although selective increased had been heard, they were not widely confirmed.

($1 = €0.73)

By: Heidi Finch
+44 20 8652 3214

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