03 August 2009 15:52 [Source: ICIS news]
LONDON (ICIS news)--Polypropylene (PP) buyers in Europe are being forced to accept more price increases after July’s €80-100/tonne ($114-143/tonne) hike, as product availability tightens further, sources agreed on Monday.
“I can’t risk not having the product. One of my suppliers has some production issues and I’m trying to find an alternative source, but producers just don’t have material,” said one large buyer.
Increases of €80/tonne in July led to prices of €900-920/tonne FD (free delivered) NWE (northwest ?xml:namespace>
By the end of the July, however, the increases moved up to €100/tonne compared with June.
Spot prices were in the mid-€800s/tonne FD NWE on a net basis.
August PP prices were not yet settled, but lack of available propylene, and subsequently PP, meant that buyers who needed material had to pay higher prices.
“I am being offered plus €50-60/tonne for August so far,” said the buyer.
Net prices were now close to €900/tonne FD NWE in most cases, sources agreed.
“I expect prices to strengthen again in the coming days as August gets under way,” said a trader. “Demand is not that strong but there’s no material around.”
There was now little possibility of exporting material to
Homopolymer injection prices of $1,100/tonne CFR in Asia were no longer workable with new, higher prices in
PP producers reported a strong situation which they envisaged continuing into September.
“We will probably be looking for higher prices again in September. We still haven’t fully covered the propylene increases this year,” said one producer.
All sources agreed that the current spate of price increases was based on reduced supply, rather than strong demand.
“This increase is more supply than demand driven,” said another PP producer.
Propylene supply was particularly tight as crackers had been cut back mainly to stem the oversupply in the ethylene market. This inevitably affected the supply of the by-product propylene.
“PP is good business at the moment,” said a distributor. “It’s a pity it’s only short term.”
New capacities, from the Middle East and
PP and polyethylene (PE) producers in
($1 = €0.70)
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