Europe February TDI contracts largely soften, rollovers reported

12 February 2014 23:59  [Source: ICIS news]

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices for February have largely been assessed lower, despite some price rollovers being reported, sources said on Wednesday.

Despite initial expectations for largely steady prices in February on fairly balanced market conditions, further feedback has shown that the overriding price sentiment is soft. This was attributed to plentiful supply and competitive pressure which has overshadowed the rise in the upstream toluene contract price.

One buyer said: “[There] must be enough material in the market - everyone wanted to sell. Some offered rollovers and then reduced [price].”

Price decreases of €10-40/tonne were largely confirmed by buying and selling sources in a number of cases, with the larger price drops seen to be most realistic.

TDI contract prices have been assessed in February down by €30-40/tonne, taking values to €2,060-2,120/tonne FD (free delivered) WE (western Europe), according to ICIS.

Numbers either side of the range were also reported in a few cases, but there was insufficient market confirmation to substantiate them as a general market level.

One producer said it had initially targeted price increases for margin reasons, but had compromised at a price rollover, refusing to accept any price erosion.

However, other selling sources acknowledged they had also had to accept price decreases in a number of cases. These sellers and a few buyers said they had agreed to some price rollovers, but this was not seen to reflect the general trend.

Sellers remained disappointed with the outcome of TDI price discussions in February in view of the increase in the upstream toluene contract and their need to recoup lost margins amid feedstock increases over recent months. However, the general feeling was that TDI prices in February were determined by market fundamentals rather than feedstock movement.

Material remains readily available amid reasonable, but not great demand and improved reliability in the industry so far in 2014 when compared with the second half of 2013 when some output constraints occurred.

Views on demand were mixed, depending on player. Sellers maintain activity is regular and in line with expectations for the time of year and that February is a shorter working month.

One of the producers, however, did note some regional variation, stating that demand was particularly good in eastern Europe and for exports to the Middle East and Africa amid growth potential in these emerging markets.

The same source said, by contrast, offtake in northwest Europe, remained fairly flat because it is a more mature market.

Buying sources, meanwhile, generally describe downstream demand in the bedding and furniture sectors as satisfactory, but could be better in most parts of Europe.

They said that although there has been some seasonal improvement, it remains modest and continues to be limited by underlying economic constraints and reduced consumer confidence and spending.

Several players maintain that bedding and furniture demand should be seasonally good in Europe in the first quarter of the year, although one producer contests this, stating that demand should seasonally pick up in Europe in the second quarter.

By: Heidi Finch
+44 20 8652 3214

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