Europe January TDI contracts remain largely steady

15 January 2014 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices have remained steady into January as sellers’ needs for margin recovery are being offset by good supply, player absences and a lack of clear direction over demand for January at the time of discussions, said market players on Wednesday.

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

Numbers either side of the range and price movements in either direction were also mentioned in January, but they were not widely confirmed.

A number of players were absent from the market on holidays in the first part of January and it was difficult in practical terms to negotiate prices and so price stability was a default option.

In addition, it remained unclear when some TDI contract business had been discussed back in December how demand would pan out so stable prices were agreed.

Sellers said there was an underlying need to increase prices for margin reasons, particularly as the hike in the upstream toluene contract price in December had not been passed on. However, improved supply during December had meant price stability was most realistic.

One manufacturer said it had implemented a mix of rollovers and increases of €20/tonne in January, citing good demand in certain parts of Europe and for exports. However the latter was not confirmed by other market players.

By contrast, a few buying sources said they had price reductions of €20-40/tonne in January amid soft market conditions. One of the customers, however, said it had a mix of rollovers and price reductions and the players who had reduced prices had been higher priced in December.

Feedstock developments had not had any impact in January on TDI prices, which are largely driven by market fundamentals.

One buyer said demand was not sufficient to substantiate any upward price move and the same source suggested recent changes in feedstocks were not enough to necessitate any real change in prices.

The European toluene contract price had a mixed direction over the last two months, as it went up significantly in December but softened in January.

After the January toluene contract price settlement, there has been a firmer tendency in the aromatics complex and TDI sellers are closely monitoring further toluene developments for TDI price ideas in February amid already low profitability.

A few suppliers said their initial targets for February prices range between rollover to possible increase for TDI in February, pending further feed and market developments. 

Buyers expect sellers to push for higher TDI prices in February, if the toluene spot sentiment continues to firm, but they were not convinced that any upward price movement will be possible for TDI if demand remains below expectations for the time of year.

TDI availability remains good and views on demand are mixed, depending on source. Sellers describe activity in the main downstream bedding and furniture sectors as reasonable to good.

Some buyers said that while there has been some slight improvement in activity from December to January, they said that demand is still not where it should be for this time of year, which they attribute to some residual economic constraints.

Bedding and furniture activity in Europe is traditionally in high season during the first part of the year.


By: Heidi Finch
+44 20 8652 3214



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