Europe May MDI prices largely stable with selective rises

14 May 2014 23:59  [Source: ICIS news]

LONDON (ICIS)--European methyl di-p-phenylene isocyanate (MDI) contract prices have largely rolled over into May on a generally balanced market, recent price hikes and a limited rise in the upstream benzene contract, market players said on Wednesday.

In addition, a number of crude MDI contracts were fixed for the quarter, which means that these prices will remain steady into May.

Prices are at €2,070-2,130/tonne FD (free delivered) W (western) Europe for crude MDI and €2,260-2,330/tonne FD W Europe for pure MDI, according to ICIS.

Buying sources said that benzene feedstock costs were not part of the May MDI discussions because there was only minimal price movement.

One main manufacturer said it had also settled its MDI contracts for May prior to the benzene contract settling. It had previously said it had not expected a fundamental change in upstream benzene costs.

The same selling source said that general price stability was mainly the case in May, as sellers had a cautious approach despite the general uptick in the market.

The same supplier, however, said that while it had largely rolled over its crude MDI prices in May, this had had come from a higher starting point in April following the implementation of increases of €30-50/tonne from March to April.

It therefore quoted crude MDI prices of €2,090-2,150/tonne FD in May, but there was insufficient market confirmation to substantiate this, even from other sellers. In fact, one supplier said that while it had prices up to €2,150/tonne FD, it conceded that this was for small volumes only.

The ICIS crude MDI range refers to average volumes, who typically buy between 5,000-10,000 tonnes/year, according to ICIS methodology.

By contrast, crude MDI prices in the €1,800s/tonne FD and slightly below were also heard in May from a few buying sources, but they were seen to be for net values. The ICIS range is reflective of gross (non-discounted) prices only.  

Other reasons for the general price stability was sufficient-to-good supply, depending on source, seasonally expected demand for this time of the year and in view of recent MDI price increases.

Some upward price adjustments, however, were mentioned by a few suppliers but this was seen to be selective and depending on what level of increase had already been implemented over the last few months, as well as individual stock position of the supplier.

Crude MDI consumption into the downstream construction sector is generally healthy, in line with seasonal expectations for this time of the year. Construction activity is traditionally enters into high season during the spring months amid favourable weather conditions.

One MDI supplier said that on top of good construction activity, it has also seen a pick-up in demand from the downstream appliances sector.  

A few players, however, suggested that MDI demand from the building sector has been slightly lower than expected, which they attribute to a number of public holidays in the second half of April and during May or some ongoing economic constraints limiting activity in southern Europe.

One buyer, however, said that while its activity in the Mediterranean has been subdued, this is being compensated by robust demand from northwest Europe.

Pure MDI demand is reasonable to good, with little-to-no real evidence of any seasonal slowdown, depending on source. Pure MDI from the downstream footwear sector traditionally enters into low season during the spring months.

MDI availability remains good, according to the buy-side, despite recent output problems from one main supplier. A few sellers, however, considered availability to be limited, particularly for pure MDI.

One of the sources attributed this to healthy demand, combined with the residual effects of recent production problems for one main player.

The latter is due to the fact that pure MDI is structurally lower in yield compared with crude MDI and therefore can be more affected by MDI output constraints.


By: Heidi Finch
+44 20 8652 3214



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