LONDON (ICIS)-European toluene di-isocyanate (TDI) contract price ideas for December are expected to be steady, albeit with selective increases, depending on sellers' supply position, market players said on Wednesday.
Price settlements are starting to filter in at generally stable levels. Although sellers said there is an underlying need to increase prices for margin recovery in view of higher upstream costs, it was not seen as practical for a hike ahead of a seasonal downturn in activity.
Some selling and buying sources confirmed price rollovers, although there were reports a few sellers had been more bullish on price increases in December amid low stock levels, resulting from recent output constraints.
A few suppliers said they had passed on price rises of €20-30/tonne ($27-41/tonne) in December but this was so far not seen to be reflective of a general market trend. One seller said it had in fact seen price rollovers and noted any price increases were incorporated within the existing range.
One buyer said it had not accepted a price hike from one of its suppliers but admitted it had agreed an increase of €10/tonne in November, although this was for a bi-monthly deal valid for the last two months of the year. It added the minor increase was on its lowest priced business which was not representative of the general market level.
Buyers strongly resisted any upward price move in December stating it was unjustified from a market perspective, in which demand was weak and availability was not a problem.
Most players acknowledge the spike in the upstream toluene contract price had come too late to have any real impact on TDI price discussions in December. In addition, some players noted TDI prices were largely market rather than feedstock driven.
Some sellers said they would look to raise TDI prices in January after the winter holiday period, citing intensified cost pressure, expected restocking activity and the need to improve profitability.
Some buying sources were not convinced there was a need to increase prices from a cost perspective, despite the December toluene contract price rise, stating the toluene contract price had come down in October and November and this had not been passed on into the TDI market.
Another customer did not rule out the possibility of an increase in January, particularly if feedstock costs were to remain steady or firm.
TDI consumption in the downstream bedding and furniture sectors remains seasonally low at year-end, with downstream foam plant closures likely to take place in the next few weeks and last during the Christmas/new year holiday period.
However, a few players maintain demand is still fairly solid, supported by good demand in eastern Europe and Russia and solid export activity.
TDI supply is largely sufficient, although a few sellers have low stock levels, resulting from recent output constraints. The expectation is that the market is likely to move more balanced during December as the seasonal lull in demand becomes more apparent.
European TDI contract prices were largely steady in November, with values at €2,100-2,150/tonne FD (free delivered) WE (western Europe), according to ICIS.
($1 = €0.74)