Price and market trends: Europe Nov TDI price ideas stable to firmer on output problems

08 November 2013 10:00  [Source: ICB]

Buyers resist upward price pressure in November, insisting that supply is sufficient and markets are not tight

Some European toluene di-isocyanate (TDI) producers are bullish on price increases for November on the back of tightening supply, said market players on 29 October.

However, buyers consider rollovers to be more realistic on the back of sufficient supply, despite some output constraints.

Producers have initial targets of €50-100/tonne ($69-139/tonne) for November, citing tightening supply resulting from a spate of production limitations, and good demand, as the main reasons for this. One producer had also cited margin recovery as well, following recent price drops during the summer.

Some sellers said they have already concluded some November business with increases of plus €50-70/tonne, although one conceded that plus €100/tonne was proving difficult to achieve at present.

Sellers attribute this proposed upward price pressure for November to what they consider to be good underlying demand, boosted by some additional orders resulting from Vencorex’s recent force majeure (FM) declaration on TDI produced at its Le-Pont-de-Claix site, France, which came into effect at the end of the previous week.

Vencorex’s FM and recent output constraints for other players have tightened the European market, sellers said.

Buyers, however, are generally resisting any upward price pressure in November, stating that supply is sufficient and they have not seen any market tightness, despite the Vencorex FM situation. They attribute this to demand being reasonable to modest during October and an expectation of similar, if not slightly softer, demand for November amid year-end inventory control considerations.

Customers also do not consider price increases for TDI to be justified from a feed perspective amid a bearish sentiment. Some customers said they consider price stability to be more likely for November, as production problems for one supplier are being weighed against a flat-to-softer demand outlook.

One buyer said “The only thing that could move prices up is a real shortage in supply,” adding that it did not see any supply disruption, despite Vencorex’s FM situation. It said that if other plant reliability issues were to happen on top of Vencorex’s production constraints, then there could be some upward price pressure in November, although it said that this would be limited amid upstream bearishness and modest demand.

European TDI contract prices increased by €50/tonne in October, driven by balanced to tight market conditions and a firm producer stance.

European TDI contract prices in October were assessed at €2,100-2,150/tonne FD (free delivered) WE (western Europe).

By: Heidi Finch
+44 20 8652 3214

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