FocusEurope PP prices continue slide in May

07 May 2008 17:44  [Source: ICIS news]

LONDON (ICIS news)--Polypropylene (PP) prices are decreasing as May business gets under way, falling for the third consecutive month this year, market sources said on Wednesday.

 

“It’s all down to supply and demand,” said one large buyer. “The market seems to be disconnected from upstream movements.”

 

New record high prices in the oil markets left Brent crude currently above $120/bbl, increasing PP production costs.

 

There was still no sign of major cracker reductions, however, a move which many in the PP market saw as the only way to halt the current price slide.

 

“Soon we will be like polystyrene in the past, when polymer was cheaper than monomer,” said one European PP producer.

 

The second-quarter propylene contract stands at €927/tonne ($1,448/tonne) FD (free delivered) NWE (northwest Europe) but spot monomer was well below this.

 

Precise levels were difficult to pin down due to the lack of firm business but numbers for polymer grade were talked around €800/tonne CIF (cost, insurance and freight) NWE.

 

Homopolymer injection PP prices were also difficult to pin down, given the wide range of numbers talked but even producers were talking of a price drop of €30-40/tonne on monthly business, while the spot market revealed a much wider range of levels.

 

Gross monthly prices were talked widely in the mid-€1,100s/tonne FD, while some spot levels were down below €1,100/tonne FD NWE.

 

Some sources reported more than usual offers of off-grade PP, sometimes down to €900/tonne FD NWE. There was some scepticism as to whether this was true off-grade.

 

Internet selling platforms from some producer sources were reported to be publicly offering copolymer grades at €1,110/tonne FCA (free carrier). Transport would later be added to this price but it was nevertheless considered low by most observers.

 

In the past it had been the norm for copolymer to trade at a €50/tonne premium to homopolymer.

 

One major producer predicted May would see the bottom of PP pricing in the current cycle, however.

 

“This has to be the bottom. Nobody will allow prices to go down further in June. Crackers will be cut,” he said.

 

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

 

($1 = €0.64)

 

For more on PP visit ICIS chemical intelligence

 

 

By: Linda Naylor
+44 20 8652 3214

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