Europe PP prices to remain strong, say producers

25 May 2007 15:20  [Source: ICIS news]

LONDON (ICIS news)--Polypropylene (PP) producers in Europe were aiming to increase prices next month against a backdrop of a firm market which they expected to continue for some months to come due to tight supply, several of them said on Friday.

 

“With the closure of two PP plants in the next few weeks and monomer on the brink of a new record high price, PP will remain firm,” said a major producer.

 

One major PP buyer said his company was under pressure to pay more next month.

 

“We haven’t yet closed the price for June but my feeling is that we’ll pay €20-€30/tonne ($26.93-$40.39/tonne) more than the previous month. That’s probably caused by the expectation on monomer price trend for next quarter,” he said.

 

Basell’s 240,000 tonne/year PP unit at Pernis in the Netherlands was scheduled to close on 30 June, and INEOS Polyolefins’ 200,000 tonne/year PP1 unit at Geel in Belgium would close down as planned during the second quarter, according to a company source, though the firm’s 300,000 tonne/year copolymer unit at the site would continue operating.

 

The loss of the plants in the next few weeks would affect supply, said one major PP producer, adding it would mean a loss of 35,000 tonnes of PP monthly.

 

“The market is growing at 3% a year, which is approximately 250,000-300,000 tonnes annually, so the market will definitely feel the effect of the two closures,” he said.

 

Both plants to be closed use old technology and were no longer considered viable as new capacities came on stream, particularly in the Middle East. The European market was not expected to be affected in 2007 and even during the first half of 2008, however.

 

Borealis was still on schedule to start up its new 330,000 tonne/year PP plant in Burghausen in Germany in November but this would be producing mainly specialities, market sources said.

 

INEOS will also be debottlenecking an existing plant in Grangemouth, Scotland, and building a new PP unit in Geel to be operational by 2009.

 

PP prices had increased in May, by an average of €15/tonne, leaving gross homopolymer PP prices close to €1,200/tonne FD (free delivered) northwest Europe (NWE), according to global chemical market intelligence service ICIS pricing.

 

Basell is the world's largest producer of polypropylene and advanced polyolefins products, a leading supplier of polyethylene and catalysts and a global leader in the development and licensing of polypropylene and polyethylene processes.

 

INEOS is a leading global manufacturer of petrochemicals, specialty chemicals and oil products.

 

($1 = €0.74)

 

 

 

 

 

By: Linda Naylor
+44 20 8652 3214

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