FocusEurope spot PP hits 3-year low at €1,000/t

27 October 2008 17:39  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS news)--European polypropylene (PP) spot prices have dipped to €1,000/tonne ($1,250/tonne), a level not seen in Europe since September 2005 and fast approaching fourth-quarter propylene contract levels, sources agreed on Monday.

“I haven’t had so many calls in months,” said one large buyer commenting on the number of sellers who were now actively seeking his business.

PP prices were on a free delivered (FD) northwest Europe (NWE)

Imported volumes were offered, including from new capacities in the Middle East. 

“The Asian market is so weak that they can’t sell it out there, so we are seeing offers of imported material that we haven’t seen in years,” said the buyer.

PP prices had been more stable than polyethylene (PE) in recent weeks, but PP buyers were now expecting European producers to match offers from imported sources.

“It’s true, the market is difficult,” said one PP producer, “but there is still some demand in the PP market. In PE, it is dead.”

PE prices were falling below those of the headline price of the fourth-quarter ethylene price last week, but PP remained above the fourth-quarter propylene price of €953/tonne FD NWE.

Sources wondered for how long this would last. Global PP and propylene prices were collapsing, and sources felt that the European market could not be isolated for long.

Spot C3 fell by $200/tonne in Asia, to $535-600/tonne, while in Europe it was just below the contract, at €890-910/tonne FD NWE. This disparity could not be held for long, said sources.

One commentator said the market would have to get used to a reality that polymer market had been immune to over the past few years; a situation where integrated margins were the ones that mattered, and that there would be little spread between monomers and polymers in the fourth quarter at least.

“The quarter four ethylene contract is irrelevant,” said one PE producer.

Cracker margins were described as excellent by one PE producer, even if spot low density PE (LDPE) was now below the fourth-quarter ethylene price of €1,120/tonne FD NWE.

Naphtha was down below $400/tonne CIF (cost, insurance and freight) NWE, making the spread between naphtha and ethylene very attractive for producers.

“There is still along way for prices to fall,” said a couple of polymer buyers who intended to wait as long as possible before buying only minimal volumes.

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

($1 = €0.80)

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By: Linda Naylor
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