01 February 2010 16:37 [Source: ICIS news]
LONDON (ICIS news)--Polypropylene (PP) buyers in Europe have been resisting producers’ attempts to force through more than the €85/tonne increase in the February propylene monomer contract price, several sources said on Monday.
PP producers had announced increases of €100-130/tonne ($140-181/tonne) to the market for February, however so far, little has been settled. The February propylene monomer contract had settled at €875/tonne FD (free delivered) NWE (northwest ?xml:namespace>
“They [producers] are going to shoot themselves in the foot,” said a large buyer, adding: “They will ramp prices up, nobody will buy, ethylene and propylene will come down again and prices will fall.”
“I can avoid buying for the first half of the month,” a smaller buyer added.
“Then we will see if they still want more than the monomer increase,” it said.
“What we are witnessing today is an aggressive price inflation on chemicals, even not supported by higher oil prices, which will finally will lead to another knock down of economy,” another large buyer added.
Brent crude oil was trading at $71.54/bbl at noon on Monday, and naphtha was at $656/tonne CIF (cost insurance freight) at the same time.
However, producers stressed that product was tight and cited that this, along with low margins, was the main reason for seeking higher prices in February.
“We just can’t get hold of the propylene,” said a major PP producer, adding; “Product is tight. We are struggling to fulfil our contractual volumes.”
“Availability is tight at the moment so the producers are going for it. I can’t see buyers being loyal to them when the market turns. They [buyers] will just follow the lowest price,” a trader said.
Converters have been waiting many months for imported volumes from new capacities to be offered into
However, there are signs that volumes are becoming available.
“I am still buying product from my major European suppliers but I have some spot material this month, and will have more next month,” said a buyer, adding: “The volumes are not great and what has turned out to be a good price could have been a bad one, but at least we now have some offers.”
Homopolymer injection spot prices were trading around the €1,000/tonne FD NWE level at the beginning of February after prices had languished in the low €900s/tonne for several weeks.
PP producers in
($1 = €0.72)
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