Polyols producers target substantial July hikes on PO shortage

18 June 2014 17:41 Source:ICIS News

LONDON(ICIS)--Sellers of flexible polyols are targeting a €100/tonne increase in July as availability is expected to be drastically reduced in the fallout of the explosion at Shell’s upstream propylene oxide (PO) facility in Moerdijk, Netherlands, sources said on Wednesday.

Producers noted the price of propylene has been rising on a net basis in 2014 with no compensating increases in the flexible polyols market. One producer said it has already implemented a €100/tonne increase with immediate effect.

Demand was seen to be spiking despite this being a quiet period in the bedding and furniture sectors as buyers secure necessary volumes, fearing it may not be available if they wait.

A buyer said it has not heard anything from its suppliers regarding a price increase but noted it is surprised this was being attempted in the low season for bedding and furniture.

It added that Shell’s facility was under maintenance when the explosion happened, implying there was no output expected anyway, and that it expected a decrease in July before the news of Moerdijk filtered in.

For rigid polyols, increases are also planned by sellers but a buyer said it expects no variation in price despite the Shell incident.

June flexible polyols contract prices were settled at €1,750-1,810 /tonne free delivered (FD) northwest Europe (NWE) and rigid polyols at €1,970-2,030/tonne FD NWE.

By Stefan Naidu