Europe April PP down despite producer targets

14 April 2008 14:41  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS news)--Good availability and flat demand were applying downward pressure to European polypropylene (PP) prices in April, in spite of one producer announcement aimed at bringing them up, market sources said on Monday.

Homopolymer injection gross prices have fallen by at least €20/tonne ($31/tonne) since March, leading to levels around €1,200/tonne FD (free delivered) NWE (northwest Europe), but buyers were looking for further decreases.

SABIC (Saudi Basic Industries Corp) announced a €15/tonne hike for all new business last week after their stocks came down due to a couple of unplanned technical issues at Geleen in the Netherlands and Gelsenkirchen in Germany.

Most buyers, and even co-producers, did not expect a turnaround during April.

“We will naturally follow any recovery in margin,” said another major European PP producer, admitting that during April this was not likely.

“We have been offered a €20/tonne decrease from March but we are holding out for more,” said a large buyer.

PP availability among producers had increased due to flat demand in the first quarter of 2008, and the lack of ability to export as dollar-based sellers were able to offer at low levels in traditional European export markets.

In general, PP production throughout Europe had also been running well, with no major outages to tighten inventories.

On the whole, producers welcomed SABIC’s initiative to target higher prices as a signal to the market that prices would not simply continue decreasing.

However, they admitted that sellers would have to control stocks and withdraw low spot offers if the situation was to change.

A couple of sellers saw an opportunity for inventory levels to come under control during the upcoming cracker maintenance season, although the programme was not on the large scale seen in 2006/2007 and PP demand would also have to pick up for the market to stabilise.

Another factor impacting the European market was the imminent start-up of Middle East PP capacities.

Saudi Arabia’s Advanced Polypropylene Co (APPC) had already begun to export product from its 450,000 tonne/year plant at Al-Jubail, which started up in March.

National Petrochemical Industrial Co (NatPet) expected to start up its propane dehydrogenation (PDH) and PP plants at Yanbu in April or May 2008. Commercial production would begin shortly after start-up.

The PP plant had already been commissioned and tested with propylene purchased from a third party, a company source said. The PDH and PP plants would each have a capacity of 400,000 tonnes/year.

Iran’s Marun Petrochemical planned to start up its 300,000 tonne/year PP plant at Bandar Imam in the second quarter, a source close to the company said.

Jam Polypropylene also of Iran expected to start up its 300,000 tonne/year PP unit at Assaluyeh by the end of April, a source close to the company said. The Jam cracker had already achieved on-spec production.

The nervousness in the European PP market came at a time when oil and naphtha continued to touch record high prices levels.

PP producers in Europe include INEOS Polyolefins, Total Petrochemicals, Dow, LyondellBasell and Borealis.

($1 = €0.64)

For more on PP visit ICIS chemical intelligence

By: Linda Naylor
+44 20 8652 3214

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