Europe December TDI contract prices largely flat, selective rises

11 December 2013 23:59 Source:ICIS News

LONDON (ICIS)--European toluene di-isocyanate (TDI) contract prices have largely rolled over into December, although some selective increases were also heard, according to market players on Wednesday.

The European TDI contract price range remains steady at €2,100-2,150/tonne ($2,877-2,945/tonne) FD (free delivered) WE (western Europe), according to ICIS.

Numbers either side of the range were also heard  in a few cases, but they were not widely confirmed.

Even though TDI sellers said there was an underlying need to raise prices for margin reasons amid a firmer upstream price tendency in December and the higher toluene contract price, most TDI sellers and buyers agreed that price increases across the board in December were not practical amid seasonally lower demand and sufficient supply.

Despite this, a few sellers were more bullish in their pricing stance amid low stocks and they said they had implemented some modest increases of €20-30/tonne in December, although two of them said they had also accepted some price rollovers as well. These sellers also acknowledged that any price increases were largely incorporated within the existing range. One manufacturer, however, quoted its prices slightly higher at the upper end of the range, but there was no other market confirmation to substantiate this.

TDI consumption in December remains low as seasonally expected at this time of the year because of stricter stock management at year-end for working capital reasons and amid a shorter working month due to the Christmas/New Year holidays.  A few players, however, suggest that there is less of a seasonal slowdown in eastern Europe and Russia in December when compared to other parts of Europe.

TDI availability is largely sufficient, although a few suppliers continue to have low stock levels, following recent production problems. However, buyers said they had not experienced any availability difficulties in view of the seasonal lull in demand.

Looking ahead, suppliers said there is an underlying need to increase prices in view of higher upstream costs and the need to recoup lost margins. Precise targets for January, however, were not yet widely forthcoming, although one producer said it would look for an increase of €50/tonne. A few other suppliers agreed that, while there was a need to raise TDI prices in January, they said this needs to be weighed against demand and how that develops in January.

Buying sources, however, considered any upward price movement in January unlikely amid sufficient supply and one of them said they did not expect any real uplift in demand in January for economic reasons. A few customers also noted that there was no real reason for a price increase from a feedstock perspective because, while the toluene contract price had gone up in December, they said it had gone down in October and November and they had not seen this passed on to the TDI market.

($1=€0.73)

By Heidi Finch