April 2020: Isocyanates little changed / Decreases on the horizon / Foam product demand sinks by a third / Rigid polyols precursors compete with disinfectants
With relatively few contracts signed up to mid-April, the price rounds for isocyanates in Western Europe were accompanied by heated discussions. By standing firm, producers were able to limit rebates for polymeric MDI to EUR 30/t, despite the dramatic EUR 400/t drop in the benzene contract and the substantial price declines that were observed in Asia and the Middle East as well. TDI buyers did only slightly better, gaining rebates of EUR 20/t. Producers were able to widen margins considerably, even though demand collapsed – for which reason most isocyanate plants were operated below capacity. Notations for both types of polyols gave way noticeably.
With many plants closed or operating below capacity due to the Covid-19 pandemic, output of foam products fell to about half or at least a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected, according to the industry association Europur – see PIEWeb of 08.04.2020. Rigid foam for insulation and technical applications fared somewhat better than flexible foam.
How the situation develops going forward will depend on how strict the limitations on business operation continue to be. If the coronavirus lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Along the ethylene chain, producers of rigid polyols are now having to compete with manufacturers of disinfectant products to be supplied, and this could act to support prices.
Change against previous month: EUR -147.00/t The high volatility of benzene notations is continuing. Cost reductions in the oil chain and a surplus in supply are creating price pressure.
Supply: normal Declining demand led to oversupply.
Demand: low The extended outage of a phenol facility lowered demand noticeably.April 2020Price: EUR 171.00/t
Change against previous month: EUR -424.00/t The drop in oil prices, associated glut of supply and exceptionally weak demand caused the benzene reference to plummet to a record low – surpassing the previous low in January 2009.
Supply: high With order activity subdued, inventories swelled significantly.
Demand: very low Demand from downstream customers weakened noticeably due to the effects from the coronavirus situation. For example, key styrene production in France is only operating at the lowest level. Polymers
Change against previous month: EUR -30.00/t The price rounds for isocyanates were accompanied by heated discussions. By standing firm, producers were able to limit rebates for polymeric MDI to EUR 30/t, despite the dramatic EUR 400/t drop in the benzene contract and the substantial price declines that were observed in Asia and the Middle East. As a result, margins improved substantially, even if demand was only about a third of the usual level.
Supply: normal BASF appears to have completed its maintenance turnround, and the outage at Huntsman did not seem to be a topic, so that it must have been business as usual in April. With demand on a low flame, most isocyanate plants were operated at greatly reduced capacity.
Demand: very low With many plants closed or operating below capacity, output of foam products fell to about a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected. Foam for insulation or technical applications fared better.Outlook May 2020Price trend: decreasing As expected, rigid foam for insulation and technical applications fared somewhat better than flexible foam, but demand began pointing downward. Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. Against this backdrop, demand for isocyanates should sink further. It is conceivable that producers could be forced to shutter plants due to a lack of storage capacity. The more likely this scenario appears, the more likely it seems that buyers will be able to gain price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Change against previous month: EUR -30.00/t As was the case for the polymeric grade, contract prices rolled over or were settled at rebates of as much as EUR 60/t.
Supply: normal BASF appears to have completed its maintenance turnround, and the outage at Huntsman did not seem to be a topic, so that it must have been business as usual in April. With demand on a low flame, most isocyanate plants were operated at greatly reduced capacity.
Demand: very low Packaging applications bucked the general trend. In contrast, with many plants closed or operating below capacity, output of foam products fell to about a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected.Outlook May 2020Price trend: decreasing As expected, rigid foam for insulation and technical applications fared somewhat better than flexible foam, but demand began pointing downward. Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. Against this backdrop, demand for isocyanates should sink further. It is conceivable that producers could be forced to shutter plants due to a lack of storage capacity. The more likely this scenario appears, the more likely it seems that buyers will be able to gain price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Change against previous month: EUR -20.00/t Up to now, rebates were relatively minor, in the range of up to EUR 35/t, despite the EUR 275/t plunge in the toluene price and the almost complete lack of demand. Large accounts sometimes paid less than EUR 1,600/t.
Supply: normal Most isocyanates plants are now running at severely reduced capacity. However, there have been no reports of complete shutdowns.
Demand: very low Demand from the bedding and automotive sectors has nearly collapsed. Production of flexible foam in Europe sank to less than half the normal level in April due to numerous plant shutdowns and curbs on capacity generally. Facilities in Southern Europe were the most severely affected, with Northern Europe hit slightly less hard.Outlook May 2020Price trend: decreasing Price deterioration for TDI has been relatively minor up to now, but this could change in view of the steep declines seen farther up the production chain. Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. This means that order volume for isocyanates could sink more sharply. It is conceivable that producers could be forced to shutter their plants due to a lack of storage capacity. The more likely this scenario appears, the more likely it seems that buyers will be able to gain price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Further Details… PU polyols flexibleApril 2020Price: EUR 1,910.00/t
Change against previous month: EUR -55.00/t The plunge in the propylene contract price, which is factored into the propylene oxide price one-to-one, as well as the collapse in demand from the bedding and automotive sectors, led demand for flexible polyols to shrink. Price concessions spanned a wide range, averaging up to EUR 100/t.
Supply: normal Few outages were registered but most plants were operating well below capacity.
Demand: very low Demand from the bedding and automotive sectors has nearly collapsed. Production of flexible foam in Europe sank to less than half the normal level in April due to numerous plant shutdowns and curbs on capacity generally. Facilities in Southern Europe were the most severely affected, with Northern Europe hit slightly less hard.Outlook May 2020Price trend: decreasing Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. It is conceivable that producers could be forced to make capacity cuts or even shutter their plants due to a lack of storage capacity or a shortage of C3 feedstock. Despite these two diverse scenarios, buyers are likely to gain additional price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Further Details… PU polyols rigidApril 2020Price: EUR 2,250.00/t
Change against previous month: EUR -50.00/t Rigid polyols saw slightly less price pressure than flexible polyols. Rebates granted were of a rather similar dimension on average, though without such pronounced swings in either direction.
Supply: normal Few outages were registered but most plants were operating well below capacity.
Demand: very low With many plants closed or operating below capacity, output of foam products fell to about a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected. Foam for insulation or technical applications fared better.Outlook May 2020Price trend: little change Insulation and technical foam applications should continue to perform better than flexible foam applications. However, the market in general can be expected to deteriorate. Along the ethylene chain, rigid polyol producers are now having to compete with manufacturers of disinfectant products for feedstock supply, and this could act to support prices.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
April 2020: Isocyanates little changed / Decreases on the horizon / Foam product demand sinks by a third / Rigid polyols precursors compete with disinfectants
With relatively few contracts signed up to mid-April, the price rounds for isocyanates in Western Europe were accompanied by heated discussions. By standing firm, producers were able to limit rebates for polymeric MDI to EUR 30/t, despite the dramatic EUR 400/t drop in the benzene contract and the substantial price declines that were observed in Asia and the Middle East as well. TDI buyers did only slightly better, gaining rebates of EUR 20/t. Producers were able to widen margins considerably, even though demand collapsed – for which reason most isocyanate plants were operated below capacity. Notations for both types of polyols gave way noticeably.
With many plants closed or operating below capacity due to the Covid-19 pandemic, output of foam products fell to about half or at least a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected, according to the industry association Europur – see PIEWeb of 08.04.2020. Rigid foam for insulation and technical applications fared somewhat better than flexible foam.
How the situation develops going forward will depend on how strict the limitations on business operation continue to be. If the coronavirus lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Along the ethylene chain, producers of rigid polyols are now having to compete with manufacturers of disinfectant products to be supplied, and this could act to support prices.
Change against previous month: EUR -147.00/t The high volatility of benzene notations is continuing. Cost reductions in the oil chain and a surplus in supply are creating price pressure.
Supply: normal Declining demand led to oversupply.
Demand: low The extended outage of a phenol facility lowered demand noticeably.April 2020Price: EUR 171.00/t
Change against previous month: EUR -424.00/t The drop in oil prices, associated glut of supply and exceptionally weak demand caused the benzene reference to plummet to a record low – surpassing the previous low in January 2009.
Supply: high With order activity subdued, inventories swelled significantly.
Demand: very low Demand from downstream customers weakened noticeably due to the effects from the coronavirus situation. For example, key styrene production in France is only operating at the lowest level. Polymers
Change against previous month: EUR -30.00/t The price rounds for isocyanates were accompanied by heated discussions. By standing firm, producers were able to limit rebates for polymeric MDI to EUR 30/t, despite the dramatic EUR 400/t drop in the benzene contract and the substantial price declines that were observed in Asia and the Middle East. As a result, margins improved substantially, even if demand was only about a third of the usual level.
Supply: normal BASF appears to have completed its maintenance turnround, and the outage at Huntsman did not seem to be a topic, so that it must have been business as usual in April. With demand on a low flame, most isocyanate plants were operated at greatly reduced capacity.
Demand: very low With many plants closed or operating below capacity, output of foam products fell to about a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected. Foam for insulation or technical applications fared better.Outlook May 2020Price trend: decreasing As expected, rigid foam for insulation and technical applications fared somewhat better than flexible foam, but demand began pointing downward. Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. Against this backdrop, demand for isocyanates should sink further. It is conceivable that producers could be forced to shutter plants due to a lack of storage capacity. The more likely this scenario appears, the more likely it seems that buyers will be able to gain price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Change against previous month: EUR -30.00/t As was the case for the polymeric grade, contract prices rolled over or were settled at rebates of as much as EUR 60/t.
Supply: normal BASF appears to have completed its maintenance turnround, and the outage at Huntsman did not seem to be a topic, so that it must have been business as usual in April. With demand on a low flame, most isocyanate plants were operated at greatly reduced capacity.
Demand: very low Packaging applications bucked the general trend. In contrast, with many plants closed or operating below capacity, output of foam products fell to about a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected.Outlook May 2020Price trend: decreasing As expected, rigid foam for insulation and technical applications fared somewhat better than flexible foam, but demand began pointing downward. Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. Against this backdrop, demand for isocyanates should sink further. It is conceivable that producers could be forced to shutter plants due to a lack of storage capacity. The more likely this scenario appears, the more likely it seems that buyers will be able to gain price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Change against previous month: EUR -20.00/t Up to now, rebates were relatively minor, in the range of up to EUR 35/t, despite the EUR 275/t plunge in the toluene price and the almost complete lack of demand. Large accounts sometimes paid less than EUR 1,600/t.
Supply: normal Most isocyanates plants are now running at severely reduced capacity. However, there have been no reports of complete shutdowns.
Demand: very low Demand from the bedding and automotive sectors has nearly collapsed. Production of flexible foam in Europe sank to less than half the normal level in April due to numerous plant shutdowns and curbs on capacity generally. Facilities in Southern Europe were the most severely affected, with Northern Europe hit slightly less hard.Outlook May 2020Price trend: decreasing Price deterioration for TDI has been relatively minor up to now, but this could change in view of the steep declines seen farther up the production chain. Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. This means that order volume for isocyanates could sink more sharply. It is conceivable that producers could be forced to shutter their plants due to a lack of storage capacity. The more likely this scenario appears, the more likely it seems that buyers will be able to gain price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Further Details… PU polyols flexibleApril 2020Price: EUR 1,910.00/t
Change against previous month: EUR -55.00/t The plunge in the propylene contract price, which is factored into the propylene oxide price one-to-one, as well as the collapse in demand from the bedding and automotive sectors, led demand for flexible polyols to shrink. Price concessions spanned a wide range, averaging up to EUR 100/t.
Supply: normal Few outages were registered but most plants were operating well below capacity.
Demand: very low Demand from the bedding and automotive sectors has nearly collapsed. Production of flexible foam in Europe sank to less than half the normal level in April due to numerous plant shutdowns and curbs on capacity generally. Facilities in Southern Europe were the most severely affected, with Northern Europe hit slightly less hard.Outlook May 2020Price trend: decreasing Plant shutdowns in Germany and Italy will continue, although many voices are calling for the coronavirus-related lockdowns to be lifted. It is conceivable that producers could be forced to make capacity cuts or even shutter their plants due to a lack of storage capacity or a shortage of C3 feedstock. Despite these two diverse scenarios, buyers are likely to gain additional price concessions.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Further Details… PU polyols rigidApril 2020Price: EUR 2,250.00/t
Change against previous month: EUR -50.00/t Rigid polyols saw slightly less price pressure than flexible polyols. Rebates granted were of a rather similar dimension on average, though without such pronounced swings in either direction.
Supply: normal Few outages were registered but most plants were operating well below capacity.
Demand: very low With many plants closed or operating below capacity, output of foam products fell to about a third of the normal level. This applied mainly to facilities in Southern Europe, with Northern Europe less severely affected. Foam for insulation or technical applications fared better.Outlook May 2020Price trend: little change Insulation and technical foam applications should continue to perform better than flexible foam applications. However, the market in general can be expected to deteriorate. Along the ethylene chain, rigid polyol producers are now having to compete with manufacturers of disinfectant products for feedstock supply, and this could act to support prices.
Supply: low Producers will continue to run their plants well below capacity. An improvement in the current demand situation is not yet in sight.
Demand: very low How the situation develops will depend on how strict the limitations on business operation continue to be. If the lockdown seen in various forms in European countries over the past few weeks continues – as is expected – until the beginning of May, it could have additional repercussions for order volume and put further downward pressure on notations for all polyurethane starting materials. Products for insulation and technical applications should continue to perform better than flexible foam for the bedding and automotive sector. A very slight improvement in demand from the automotive industry is possible if assembly lines are ramped up again from the end of April as expected.
Europe PU feedstocks prices hit new lows as demand pickup lags
Author: Fergus Jensen
LONDON (ICIS)–Incremental improvements in demand for polyurethane (PU) products have slowed downward pressure on the Europe isocyanates and polyols markets where supply is abundant, and producers are now hoping for a reversal in the coming months.
– June isocyanates contracts at lowest levels on record
– June polyols contracts at lowest levels since 2009
– Summer holiday demand weakness anticipated
June contracts for polyols, toluene diisocyanate (TDI), and crude and pure methylene diphenyl diisocyanate (MDI) were all settled below May contract levels, and in some cases at hit new record lows.
The industry is largely focused on lockdowns being lifted and what impact economic difficulties resulting from the coronavirus will have on consumer spending.
POLYOLS Polyols contracts for June were assessed this week down €40/tonne at the lower end and down €50/tonne at the upper end of the range to €1,360-1,500/tonne on a free delivered (FD) basis in northwest Europe (NWE).
Sources quoted deals as low as €1,100/tonne FD NWE, however the bulk of feedback pointed to price reductions in mid-double-digit territory.
–
“All the producers cut prices with the hope of making business,” one Europe-based polyols buyer said.
“But at the moment, we cannot increase our volume.”
There was a broad range of feedback this month, depending on grade and application, with prices quoted as high as €1,500/tonne FD NWE in some cases.
The range is now at its lowest levels since September 2009.
“It’s disastrous, to be honest,” one Europe-based polyols producer said, referring to the increase in competition and in the base polyols market and recent low price levels.
Polyols producers are competing for market share in Europe, where demand has only marginally improved from May levels and remains significantly below levels seen in 2019.
“They don’t want to lose out,” a second Europe-based polyols buyer said, referring to producers.
“Maybe it’s not about losing out now but when volumes come back.”
The flexible foam market has seen some gains in demand as a result of coronavirus lockdowns being lifted.
However, some players said demand could weaken again as the summer holiday period normally prompts lower activity.
FOAMS PROPS UP TDI Demand for TDI used in flexible foam is improving, and some producers estimate June orders to be up to 20% below normal.
One Europe-based TDI producer said June orders were now at normal levels after a flurry of activity in the past week.
“They said they had to buy more because their stocks were already low in March and had to order more,” he said, referring to the recent increase in business.
Others were less optimistic about demand though.
“People are not going to shops. There’s no real enthusiasm in the market,” a Europe-based TDI buyer said.
Despite gains in demand, June TDI contracts were assessed this week dropping €50/tonne at the lower end and €70/tonne at the upper end of the range to €1,400-1,450/tonne FD W (west) Europe – the lowest level ICIS has on record.
–
Some June deals were transacted for as little as €1,300/tonne FD W Europe, said sources, although most deals have been at higher levels.
Similarly, prices as high as €1,600/tonne FD W Europe were also quoted but did not represent the wider market.
TDI players are eyeing demand for consumer goods, bedding and furniture, which has increased in May and June although it is still well below levels in 2019.
Further weakness is also expected over the summer holiday period, although there are some expectations that delayed purchasing that would have taken place from March to May could now take place.
CRUDE MDI: MOST SECTORS IMPROVE The crude MDI June contract was assessed this week dropping €20/tonne at the lower end and €30/tonne at the upper end of the range to €1,130-1,260/tonne FD W Europe, the lowest level ICIS has on record.
–
Demand for crude or polymeric MDI (PMDI) has been stabilising as demand for rigid insulation foams has been improving; some prices rolled over, sources said.
According to one Europe-based reseller, the construction market in NWE was now at 90% of activity, compared with this time in 2019.
Demand for adhesives and wood binding has also improved, as well as that for insulation panels and spray foam, among others.
In other cases, however, demand weakened, according to some players.
“Industrial adhesives have reduced volumes more than construction,” a Europe-based PMDI buyer said.
Absolute prices as low as €1,100/tonne FD W Europe were heard, but the bulk of feedback pointed to deals transacted above this level.
Reduced operating rates and an ongoing outage at the 200,000 tonne/year Covestro, Brunsbuettel plant have had no impact on availability, which remains abundant.
The MDI market is broadly exposed to the automotive sector, where demand has been hammered by the coronavirus pandemic and other factors.
“Automotive is still very quiet,” a second Europe-based PMDI buyer said.
Technical applications for PMDI have also seen more recent declines in demand.
PURE MDI: SLOW TO PICK UP Pure or monomeric MDI (MMDI) contracts for June were assessed this week dropping €50/tonne at the upper and lower ends of the range to €1,550-1,800/tonne FD W Europe, the lowest level ICIS has on record.
–
Deals transacted as low as €1,400/tonne FD W Europe were quoted but not believed to reflect the bulk of business.
The market had little activity this week; demand for MMDI for use in the automotive sector in Europe has declined significantly in recent months, while technical polyurethane applications that use MMDI have seen demand deteriorate more recently.
“You can’t get rid of pure MDI,” a Europe-based MMDI reseller said, referring to declines in demand in thermoplastic polyurethane (TPU), footwear and synthetic leather applications.
“The situation will probably only really improve after the summer holiday.”
Demand from the footwear sector has improved in some areas but remains fragile.
“It’s still a bit challenging because of the shoe sole industry. Demand is a little bit low,” one Europe-based MMDI producer said.
MMDI premiums over polymeric MDI (PMDI) have been squeezed in recent months, reducing producer margins and prompting output curbs.
Europe PU feedstocks prices hit new lows as demand pickup lags
Author: Fergus Jensen
LONDON (ICIS)–Incremental improvements in demand for polyurethane (PU) products have slowed downward pressure on the Europe isocyanates and polyols markets where supply is abundant, and producers are now hoping for a reversal in the coming months.
– June isocyanates contracts at lowest levels on record
– June polyols contracts at lowest levels since 2009
– Summer holiday demand weakness anticipated
June contracts for polyols, toluene diisocyanate (TDI), and crude and pure methylene diphenyl diisocyanate (MDI) were all settled below May contract levels, and in some cases at hit new record lows.
The industry is largely focused on lockdowns being lifted and what impact economic difficulties resulting from the coronavirus will have on consumer spending.
POLYOLS Polyols contracts for June were assessed this week down €40/tonne at the lower end and down €50/tonne at the upper end of the range to €1,360-1,500/tonne on a free delivered (FD) basis in northwest Europe (NWE).
Sources quoted deals as low as €1,100/tonne FD NWE, however the bulk of feedback pointed to price reductions in mid-double-digit territory.
–
“All the producers cut prices with the hope of making business,” one Europe-based polyols buyer said.
“But at the moment, we cannot increase our volume.”
There was a broad range of feedback this month, depending on grade and application, with prices quoted as high as €1,500/tonne FD NWE in some cases.
The range is now at its lowest levels since September 2009.
“It’s disastrous, to be honest,” one Europe-based polyols producer said, referring to the increase in competition and in the base polyols market and recent low price levels.
Polyols producers are competing for market share in Europe, where demand has only marginally improved from May levels and remains significantly below levels seen in 2019.
“They don’t want to lose out,” a second Europe-based polyols buyer said, referring to producers.
“Maybe it’s not about losing out now but when volumes come back.”
The flexible foam market has seen some gains in demand as a result of coronavirus lockdowns being lifted.
However, some players said demand could weaken again as the summer holiday period normally prompts lower activity.
FOAMS PROPS UP TDI Demand for TDI used in flexible foam is improving, and some producers estimate June orders to be up to 20% below normal.
One Europe-based TDI producer said June orders were now at normal levels after a flurry of activity in the past week.
“They said they had to buy more because their stocks were already low in March and had to order more,” he said, referring to the recent increase in business.
Others were less optimistic about demand though.
“People are not going to shops. There’s no real enthusiasm in the market,” a Europe-based TDI buyer said.
Despite gains in demand, June TDI contracts were assessed this week dropping €50/tonne at the lower end and €70/tonne at the upper end of the range to €1,400-1,450/tonne FD W (west) Europe – the lowest level ICIS has on record.
–
Some June deals were transacted for as little as €1,300/tonne FD W Europe, said sources, although most deals have been at higher levels.
Similarly, prices as high as €1,600/tonne FD W Europe were also quoted but did not represent the wider market.
TDI players are eyeing demand for consumer goods, bedding and furniture, which has increased in May and June although it is still well below levels in 2019.
Further weakness is also expected over the summer holiday period, although there are some expectations that delayed purchasing that would have taken place from March to May could now take place.
CRUDE MDI: MOST SECTORS IMPROVE The crude MDI June contract was assessed this week dropping €20/tonne at the lower end and €30/tonne at the upper end of the range to €1,130-1,260/tonne FD W Europe, the lowest level ICIS has on record.
–
Demand for crude or polymeric MDI (PMDI) has been stabilising as demand for rigid insulation foams has been improving; some prices rolled over, sources said.
According to one Europe-based reseller, the construction market in NWE was now at 90% of activity, compared with this time in 2019.
Demand for adhesives and wood binding has also improved, as well as that for insulation panels and spray foam, among others.
In other cases, however, demand weakened, according to some players.
“Industrial adhesives have reduced volumes more than construction,” a Europe-based PMDI buyer said.
Absolute prices as low as €1,100/tonne FD W Europe were heard, but the bulk of feedback pointed to deals transacted above this level.
Reduced operating rates and an ongoing outage at the 200,000 tonne/year Covestro, Brunsbuettel plant have had no impact on availability, which remains abundant.
The MDI market is broadly exposed to the automotive sector, where demand has been hammered by the coronavirus pandemic and other factors.
“Automotive is still very quiet,” a second Europe-based PMDI buyer said.
Technical applications for PMDI have also seen more recent declines in demand.
PURE MDI: SLOW TO PICK UP Pure or monomeric MDI (MMDI) contracts for June were assessed this week dropping €50/tonne at the upper and lower ends of the range to €1,550-1,800/tonne FD W Europe, the lowest level ICIS has on record.
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Deals transacted as low as €1,400/tonne FD W Europe were quoted but not believed to reflect the bulk of business.
The market had little activity this week; demand for MMDI for use in the automotive sector in Europe has declined significantly in recent months, while technical polyurethane applications that use MMDI have seen demand deteriorate more recently.
“You can’t get rid of pure MDI,” a Europe-based MMDI reseller said, referring to declines in demand in thermoplastic polyurethane (TPU), footwear and synthetic leather applications.
“The situation will probably only really improve after the summer holiday.”
Demand from the footwear sector has improved in some areas but remains fragile.
“It’s still a bit challenging because of the shoe sole industry. Demand is a little bit low,” one Europe-based MMDI producer said.
MMDI premiums over polymeric MDI (PMDI) have been squeezed in recent months, reducing producer margins and prompting output curbs.
Europe ethylene spot prices rise but propylene fails to gain traction
Author: Nel Weddle
2020/06/05
LONDON (ICIS)–Ethylene and propylene demand remains rather mixed depending on derivative and application and the outlook is still certainly unpredictable but, on a short-term basis, there have been some shifts in spot prices.
ETHYLENE FIRMS AS MARKET BALANCES Ethylene has moved from an extremely lengthy supply position – lowest pricing point in April and H1 May – into a much more balanced scenario.
A fire at Borealis’ Stenungsund, Sweden cracker on 11 May and its subsequent ongoing outage, together with unplanned issues at the Priolo and Brindisi crackers in the Mediterranean, changed the fortunes of those ethylene sellers constantly under pressure to manage their balances.
The uptrend in crude oil and naphtha through May which led to the €60/tonne increase in the ethyelene June contract reference price has continued, in turn underpinning sellers’ price ideas.
Some players have described the market as short at least for prompt tonnes, others disagree but admit that the unsolicited, frequent calls and offers from sellers, so common just a few short weeks ago, have disappeared.
Sellers may be being a little more cautious in releasing tonnes given the ongoing supply constraints caused by the unplanned production issues as well as some cutbacks to operating rates where C4s/butadiene (BD) offtake is a problem.
Demand levels are not bad overall – polyethylene (PE) remains strong and polyvinyl chloride (PVC) is slowly improving, although ethylene glycol (MEG) remains soft.
Spot prices which were pegged at discounts of 50-60% in April are now being done at discounts of 25% against the higher June contract price.
Subsequent offers have been heard around June contract price minus 20% but no deals so far heard concluded at that level.
– PROPYLENE: NOT THERE YET Propylene meanwhile appears to be moving in the opposite direction.
Firming fundamentals on the back of strong demand from polypropylene (PP) and derivatives like isopropanol (IPA), together with reduced refinery output, commanded spot price percentage discounts in single-digit territory, but now discounts have slowly but steadily deepened.
Low derivative operating rates as non-polymer players run down high inventory levels amid limited export opportunities are weighing on the market, just as refinery output starts to be ramped up again.
In addition to this, the Antwerp, Belgium propane dehydrogenation (PDH) unit has been back online since H2 May after maintenance that began in late January.
May polymer grade propylene was widely traded at contract price minus 11% delivered.
Discounts of 12-13% are now more apparent for June volumes, and sources said there are offers around minus 15% too, but this is not widespread.
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Deep-sea activities have been rather thin on the ground lately; there is limited interest to import volumes but there has been talk of one or two cargoes – ethylene and propylene – having been fixed to load this month and head out to Asia; details have not been confirmed.
Looking forward, the summer is approaching and the question is whether downstream demand will slow again in line with the traditional summer dip.
“It will depend on whether we have recovered enough to be able to see a dip,” a propylene derivatives producer said.
Everyone is trying to figure this out.
Currently, players are assuming that having had so much downtime and/or reductions for the last three months, most will be eager to run through even if at lower-than-hoped operating rates.
However, much will ultimately depend on consumer confidence – players hope there will be more announcements on stimulus packages to support, in particular, the beleaguered automotive sector.
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