Price and market trends: Europe July MDI prices largely soften on good supply, slower demand

24 July 2014 11:23 Source:ICIS Chemical Business

Pure MDI for July ranged from rollovers to modest reductions as good supply weighed against mixed demand

European crude methyl di-p-phenylene isocyanate (MDI) contract prices have largely softened in July and the third quarter, despite higher upstream benzene cost pressure, on the back of a balanced-to-long MDI market, said industry players on 15 July.

Price rollovers for crude MDI were also heard for July and the third quarter, but it was not seen to reflect the general market trend.

 
 
Price decreases of €20-50/tonne were mainly mentioned for crude MDI for July and the third quarter, although in terms of absolute numbers, price reductions of €30-50/tonne were seen to be most realistic.

To reflect this, crude MDI prices have been assessed lower at €2,020-2,100/tonne FD W (Western) Europe, according to ICIS.

A few sellers said they had limited any downward pressure to €15-20/tonne for crude MDI in July, but this was not widely confirmed. By contrast, one customer said it had secured a larger price drop in excess of €50/tonne for its crude MDI business in the third quarter. However, there was no other market confirmation to substantiate this.

Numbers below the crude MDI range were heard from a few buyers for July and the third quarter, but this was not widely confirmed.

By contrast, crude MDI prices in excess of €2,100/tonne FD were also mentioned by one seller, but there was insufficient market confirmation to substantiate this.

Crude MDI consumption into the main downstream building sector was not as seasonally strong as expected during the second quarter, according to some players. They said that better than expected activity during the first quarter, which had diluted any real seasonal pick-up during the second quarter, which is traditionally high season in the construction sector.

Some economic constraints were also limiting underlying demand in some cases such as in the Mediterranean. One producer, however, considered that demand remained solid and healthy.

There is some talk of a slowdown in building activity during the summer holidays, although this will depend on the region. Some players suggest that demand in parts of northwest Europe and the Mediterranean will see a summer lull in demand, while other sources said that some parts of northwest Europe and the UK are likely to be less affected by any summer slowdown.

Pure MDI settlements for July ranged from rollovers to modest reductions as good supply was being weighed against mixed demand, depending on end-sector.

To reflect some middle ground, pure MDI prices in July were assessed slightly softer at €2,250-2,310/tonne FD W Europe.

By Heidi Finch