Europe January TDI contract price ideas largely steady

18 December 2013 17:15  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract price ideas for January are largely steady, although there is pressure in either direction, market players said on Wednesday.

This is because the increase in the upstream toluene contract price in December and the need for sellers to recoup lost margins is being weighed against improved supply, following the resolution of recent production problems.

Some sources said it is also too early to evaluate demand for January adding that while demand in the main downstream bedding and furniture sectors should pick-up in January and the first quarter, it remains to be seen if this happens.

Some sellers said they expect to see price stability in January, following some adjustment in prices in December.

A few other TDI producers said they will look to raise TDI prices in January where possible, following the recent hike in the toluene contract price in December which they could not pass on because of the seasonal lull in demand at year end.

One of the manufacturers said it would target plus €50/tonne ($68/tonne) and has achieved increases of €20/tonne so far, although this has not been confirmed on the buy side.

A second supplier said that while there is the need to increase prices for margin reasons, it expects a rollover to slight upward price movement in January, depending on starting point.  

It acknowledged that while feedstock pressure had increased in December, it was mindful that it wanted to wait until a clearer picture about TDI demand in January emerged.

Buying sources, however, were strongly resisting any upward price movement in January, stating that availability was good.

They also said they do not see any reason to increase prices from a feedstock perspective because although the toluene contract price had gone up in December, it had fallen in the preceding two months and the decrease had not been passed on into the TDI market. 

One main buyer said it considered a price rollover most realistic in January, but a few other customers did not rule out the possibility of some lower prices.

The TDI market is largely balanced, following the resolution of recent production limitations and on the back of a seasonal lull in demand at year-end.

Views on the demand outlook are mixed. Some players said that there should be some improvement in activity in January seasonally in the bedding and furniture sector and because of some general restocking after the holidays.

However, one customer acknowledged that while there may be some restocking in January, it expected it to be limited amid an ongoing cautious economic sentiment.

The same customer said that its demand forecast for January is lower compared to last few months, which it attributes to some ongoing economic nervousness for certain countries.

European TDI contract prices largely rolled over at €2,100-2,150/tonne FD (free delivered) WE (western Europe) in December, although some price increases of €20-30/tonne were heard in a few cases for sellers who had a low stock position, following recent production problems.

($1 = €0.73)

By: Heidi Finch
+44 20 8652 3214

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