Europe PP buyers in April standoff as C3 falls

26 March 2008 15:44 [Source: ICIS news]

LONDON (ICIS news)--Europe polypropylene (PP) buyers are waiting before buying their April volumes after the recent €18/tonne ($28/tonne) drop in the first second-quarter propylene (C3) settlement, market sources said on Wednesday.

Discussions were expected to be protracted as high oil prices were countered by flat demand and oversupply.

“There is only one way for prices to go now,” said one large buyer. “There is too much [on] offer. It is simple. Supply outstrips demand.”

March monthly PP prices fell by up to €40/tonne, leaving homopolymer injection gross prices at €1,230-1,240/tonne FD (free delivered) NWE (northwest Europe). Spot prices were much lower, down to €1,100/tonne FD NWE in some cases.

Imported product was offered widely, as the dollar remained weak and European PP prices high.

“South American importers have identified Europe as a good target. We are under exposure from that point of view, it cannot be denied,” said one major European PP producer.

INEOS Polyolefins asserted that it would not let prices drop further in April, however.

“The propylene decrease has now been fully factored into March PP pricing,” a company source said. “We are aiming for a rollover next month and a 5% increase in the UK to take into account the exchange rate.”

The fact that PP output was running normally in Europe added to the easy availability of material.

PP producers in Europe include LyondellBasell, Borealis, SABIC, Repsol, Dow and Total Petrochemicals.

($1 = €0.64)

By: Linda Naylor
+44 20 8652 3214

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