C3 at Q1 level of €945/t not sustainable – sources

07 March 2008 12:59  [Source: ICIS news]

By Nel Weddle

LONDON (ICIS news)--The current €945/tonne ($1,454/tonne) quarterly contract level for propylene (C3) was not sustainable and buyers and sellers would have to be realistic moving into the second quarter, market sources said on Friday.

“I firmly believe that a decrease is on the cards,” said a major integrated polyolefins producer. “The factors are hugely negative.”

Fundamentally propylene was considered weak with supply balanced to long, with spot C3 under increasing pressure from more competitively priced product because of the soft US dollar.

Deals were most recently reported at €860-870/tonne CIF (cost insurance and freight) but there was talk of offers at €840-850/tonne and even lower.

The strength of the euro was seen as a major disadvantage for derivative end-users now unable to compete on the global market while at the same time being under pressure themselves from cheaper imports.

Sellers said that high upstream crude and naphtha costs would offset consumers’ calls for a decrease, while the propylene supply and demand balance would most likely tighten in the second quarter because of planned shutdowns.

“The price of monomer cannot [any longer] be determined by the cost plus factor,” said another integrated polyolefins producer.

Another consumer agreed that “feedstock will be a smaller component” of the upcoming discussions, with derivative supply and demand playing a greater role.

Second-quarter contract negotiations were expected to get under way next week.

($1 = €0.65)

For more on C3 visit ICIS chemical intelligence

By: Nel Weddle
+44 20 8652 3214

< previous article(VIDEO – ICIS news Americas Lunchtime Bulletin 29 Oct 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly