Europe chems prices down, margins up in March: Bernstein

LONDON (ICIS)–Gross margins for European specialty and commodity chemicals continued to improve month on month in March despite a year-on-year fall in pricing during the period, amid a backdrop of improving performance across most international markets, analyst Bernstein Research said on Monday.

Pricing for commodity and specialty chemicals in Europe was flat month on month, but fell by 5% and 2% year on year respectively, according to Bernstein.

European chemicals industry gross margins increased by 18 basis points month on month in March, but were down slightly year on year on the back of a 3.4% decrease in prices, the US-headquartered firm added.

US chemicals industry gross margins improved by 31 basis points month on month in April, with commodity chemicals margins generating an uplift and specialties margins falling during the same period. Industry pricing in China and India improved sequentially in April, but were down in Russia, Bernstein added.

European paints and coatings industry prices were flat month on month and down 1% year on year in March, while industrial gases pricing was flat month on month and up year on year.

European crop protection chemicals prices were flat month on month in March and down slightly year on year, Bernstein added, questioning guidance from Switzerland-headquartered agrochems producer Syngenta that prices are likely to increase 1% in 2014.

Bernstein noted that potash prices had settled at around $305/tonne following Russia-based producer Uralkali’s sales agreement with China for product at that price level.

Potash supply deals between Uralkali, Canpotex and the Indian government were agreed higher at $322/tonne, but those agreements included some financing costs that often merit a $20/tonne premium, according to Bernstein.

The firm said, “Companies in our coverage we currently favour are in segments that can hold prices in the deflationary cost environment or have defensive characteristics.

“When cost inflation resumes, we anticipate that petrochemicals producers such as BASF… will see additional upside,” Bernstein added.