18 December 2009 12:56 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS news)--Polypropylene (PP) buyers in Europe who want to purchase extra material in December are being faced with increases of up to €100/tonne ($144/tonne) as product availability tightens and producers target increases in January, sources said on Friday.
“We have had to let down several customers,” said a distributor who was not able to cover all of December's demand due to lack of availability from its regular supplier.
“We have instructions to ask for an extra €50/tonne as an interim price hike since Monday of this week,” said another distributor, “but it’s purely cosmetic because we have no product to sell.”
The distributor reported early December net homopolymer injection prices at €920/tonne FD (free delivered) NWE (northwest ?xml:namespace>
One major producer was said to have asked for increases of €100/tonne for January PP, while others waited for the January monthly propylene contract to settle before they announced plans for January business.
“It is now irrelevant where propylene settles for January,” said the producer, who had formalised its January sales targets. “It is down to supply and demand.”
PP production had been curtailed for some months due to propylene restraints, which in turn had been affected by a sustained reduction in output at the cracker level.
Cracker cutbacks, which were now up to 20% of capacity, according to industry sources, had been initially made in order to limit ethylene output but inevitably affected propylene monomer supply.
Converters had been running on minimal stocks for several months in anticipation of imports from several new large PP plants around the world. Imports had been slow to arrive, however, and inventories along the chain were now low.
Some pre-buying had occurred in December, but producers were confident that buyers would only be able to hold out for a maximum of 7-10 days.
“We can wait. Our inventory level is lower than we expected it to be at this point in the month,” said the producer.
“They will probably be able to get an increase in January,” said a large buyer, adding; “but no way will prices go up by €100/tonne.”
Propylene monomer was under discussion for January and an increase was widely expected. However, sources said they were in no hurry to settle. The current monthly contract for December stands at €750/tonne FD NWE.
PP producers in
($1 = €0.70)
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.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections