European polyols contract price sentiment has been steady to slightly softer in June, despite the increase in the propylene contract price in June, on the back of muted demand from the main downstream bedding and furniture sectors and some competitive pressure, said market players on 11 June.
While the general sentiment for polyol contract business has been steady to softer in June with a mix of rollovers and reductions of €10-20/tonne, in terms of absolute numbers, prices were generally quoted lower for flexible and rigid polyols and the price ranges have been edged down slightly to better reflect this.
European monthly slabstock conventional flexible polyol prices were assessed in June at €1,750-1,810/tonne FD (free delivered) NWE (northwest Europe), with sucrose base rigid polyols at €1,970-2,030/tonne FD NWE, according to ICIS. This reflects a reduction of €10/tonne at the low-end of the ranges and decrease of €20/tonne at the upper part of the ranges from May.
Numbers either side of the ranges were also heard, but they were not seen to reflect the general end-user market level on a gross basis in northwest Europe.
The majority of June polyol contract business was concluded before the explosion and fire at Shell/BASF’s joint venture upstream styrene monomer (SM)/propylene oxide (PO) (MSPO-2) installation at Moerdijk in the Netherlands.
While polyol contract prices for June were largely unaffected by the incident, there were a few exceptions.
Some players maintained that they had largely agreed rollovers for June and some reductions, but nevertheless, prices were quoted lower for the most part.
One producer said it had resisted some buyer pressure for lower prices in June, stating that its later settlements had coincided with Shell/BASF upstream SM/PO plant incident. However, the same source said that even though it had rolled over prices into June, its prices were either within the range or slightly below.
The same selling source and other players acknowledged that that there has been some downward pressure on June contract business in parts of Europe on the back of flexible demand into the downstream bedding and furniture sector being low and some competitive offers from certain players. However, the latter was also prior to the disruption to the SM/PO plant at Moerdijk.
A few players, however, said they had agreed steady prices in June and confirmed prices within the existing range from May and these prices have also been more or less incorporated within the June ranges as well, albeit with a few exceptions.
One producer suggested that prices in the high €1,800s/tonne FD were also possible for small volume consumers, but there was no other market confirmation to substantiate this.
For rigid polyols, there is some monthly, as well as quarterly contract business and while the monthly contract prices were largely heard lower, despite some rollovers, quarterly prices were fixed and these prices remained steady into June. The ICIS range, however, refers to monthly contract business only, according to ICIS methodology.
Sellers stressed the ongoing need to recoup lost margins for polyols, stating that they have not been able to recoup higher propylene contract costs in June and over the last few months.
One producer said it had secured some June spot business with increases of €70-100/tonne over the contract level, although it declined to provide price levels. It said that some customers who had previously rejected its offers for June had since come to take its volumes, which it suggested was due to the incident at Moerdijk. However, there was no buyer confirmation to substantiate the higher-priced spot business.
One producer said it is hopeful that it can raise polyol prices in July, despite the quieter summer holiday period, stating that the need for margin recovery and the incident at Moerdijk, which it suggested has tightened the downstream European polyols market, are likely to be supporting factors for any upward price movement.
Some sellers said they had already seen some additional requests and orders in June, which they said was a knock-on effect from upstream constraints from their competitors. Buyers, however, said they had sufficient supply at least for the time being, although the evaluation process was still ongoing.
Underlying demand for flexible polyols from the downstream bedding and furniture sectors is reduced in several parts of Europe for seasonal and economic reasons, according to buyers. Rigid polyol demand from the downstream construction sector is seasonally good for the time of the year, although some suggest that it could be better in central Europe, which they attribute to some economic constraints.