15 February 2010 15:57 [Source: ICIS news]
LONDON (ICIS news)--European polypropylene (PP) buyers are paying higher prices in February but buying has been limited to essential purchases, as there are still widespread expectations of a price drop in 2010, sources said on Monday.
“We have seen the same buying pattern for several months now,” said a major producer. “Everyone is very cautious, buying on a hand-to-mouth basis.”
PP prices had risen by a minimum of €85/tonne ($116tonne) at most accounts in February, as producers pushed through the propylene monomer increase on to buyers. Net homopolymer PP injection prices were now around €1,020/tonne FD (free delivered) NWE (northwest ?xml:namespace>
Propylene for February stood at €875/tonne FD NWE, up €85/tonne from the January contract.
PP prices had risen due to a reduced level of output; however, this had been mainly because of the lack of available propylene monomer, rather than strong demand.
“Demand has been very disappointing,” said the producer. “But we have managed to balance the market because of monomer constraints, but also very careful planning.”
Recent figures showed that PP growth was down by around 5.5% in 2009 compared with 2008, and a couple of producer sources canvassed by ICIS news said they expect levels to be in line with GDP in 2010.
Production issues also affected supply in February.
SABIC declared force majeure on copolymer deliveries from one of its two plants at
Additionally, INEOS continued to report tight stocks due to the polyethylene (PE) issue at
INEOS had already increased its offer prices of February PP to plus €100/tonne for new business.
In spite of the strong upward pressure from producers, some smaller and medium-sized buyers said they intend to limit buying as much as possible in February, in order to avoid increases.
“I haven’t bought anything yet this month, and I don’t know whether I will. I keep getting calls from my sellers telling me that product will have run out if I don’t buy soon,” said one smaller buyer, who was not convinced by such an argument.
Larger buyers, who were more dependent on the continuity of supply, generally acknowledged that they had to pay the increases demanded if they wanted to get their material.
The market was still waiting for new Middle Eastern and Asian capacities to have an effect on prices, but projects were delayed, and the recent strong demand from
However, activity had slowed significantly in the past few days, as China came to a halt for Lunar New Year celebrations.
“A lot will depend on how strong
A rollover to slight increase was expected for propylene monomer in March, but PP producers were already mulling over increases for March PP due to the supply/demand balance, which they saw as in their favour.
“There is only one side to this market at the moment,” said another producer.
“[Propylene] is tight and production issues have made it tighter. The whole of the first half of 2010 will be balanced. There is still plenty of life left in this market and we need better margins,” the producer added.
PP producers in
($1 = €0.73)
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