Squeezed Europe PP buyers look to US, Mid-East

19 July 2007 17:58  [Source: ICIS news]

LONDON (ICIS news)--Polypropylene (PP) buyers were under heavy pressure to pay higher prices not only for July but also August due to production issues and sustained demand, several confirmed on Thursday.

“For the first time in many years we have had problems with deliveries. At this rate I can see prices moving up again next month” said a medium-sized buyer on Thursday.

Another major buyer agreed.

“If I am honest, I can’t see this market easing until the middle of next year at the earliest. It’s a hard time for buyers,” he said.

Several major producers reported a short stock position due to ongoing and earlier technical issues and the permanent closure of two PP plants, coupled with unusually strong demand.

INEOS Polyolefins put a stop order on new July sales on Wednesday 18 July, and Basell’s volumes were severely restricted due to ongoing issues at Polimeri Europa’s Porto Marghera cracker, which curtailed propylene availability at two of Basell’s Italian PP sites.

“They are forcing a €40/tonne hike on us for July, and it will be very difficult to avoid it,” said an Italian buyer on Thursday.

Several producers were already making it clear that they would be looking for increases in August, a month when prices often erode.

“I can even see prices moving up in August,” said another resigned buyer.

One trader voiced a word of caution, however.

“We have bought some new lots of PP from the US this week," he said.

With the dollar at $1.38 against the euro, offers are definitely workable, but it’s at times like these, when people just can’t see an end to a situation that a change often happens. We intend to work back to back.”

Another major European buyer said he was paying higher prices for PP from its European supply source but also reported offers of imported PP from the Middle East.

“We have received unsolicited mail today offering prime PP homopolymer injection mould material of interesting volumes of Middle East produced materials,” said a major buyer on Monday, who was looking into the possibility of buying material at lower prices than was offered from European producers.

Prices were lower than those offered from European producers and the buyer was planning to take advantage of them.

Homopolymer injection prices were moving close to €1,250/tonne FD (free delivered) NWE (northwest Europe), up by €30-40/tonne over June prices, according to global chemical market intelligence service ICIS pricing.

Leading plastics producers in Europe include Borealis, Basell, INEOS Polyolefins, Total Petrochemicals, Saudi Basic Industries Corp (SABIC), Repsol, Dow and Polimeri Europa.

($1 = €0.73)

By: Linda Naylor
+44 20 8652 3214

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