15 April 2010 15:55 [Source: ICIS news]
LONDON (ICIS news)--European polypropylene (PP) producers will be keeping a close eye on propylene prices and intend to recover any further increases in their own markets if monomer rises again in May, several said on Thursday.
“We expect another limited increase on propylene in May, and this will have to be transferred to PP,” said a major PP producer.
“We expect an increase in May propylene,” said another, adding: “But we think that will be the peak.”
Other sources said that it was too early to speculate over the May propylene contract price, although they admitted that monomer was in tight supply.
The April propylene monomer contract had soared by €70/tonne ($95/tonne) to €980/tonne FD (free delivered) NWE (northwest ?xml:namespace>
The spot monomer price was currently assessed above €1,000/tonne CIF (cost, insurance and freight) NWE.
PP availability had been reduced for months due to monomer restrictions, on the back of reduced refinery runs and curtailed cracker production, which was initially implemented to manage the output of ethylene.
Buyers had been faced with price increases of €300/tonne in 2010, leaving net homopolymer injection prices at €1,200/tonne FD NWE.
Converters complained that credit lines were being squeezed tight as limits had not been lifted by 30% in line with PP prices.
PP volumes in March were considerably better than in January and February, and brought 2010 year-to-date levels in line with first-quarter volumes in 2009. Producers reported that April demand was in line with March.
Spot sellers still complained that it was difficult to sell above €1,200/tonne FD NWE on a net basis, but there was little spot product around to offer.
“I have been offered off-spec at only €20/tonne below prime,” said a potential spot buyer.
PP producers expected the tight situation to continue throughout the second quarter, but admitted that imported volumes could impact the market during the second half of the year.
“Margins are not bad at the moment, but who knows what’s going to happen in the second half 2010,” said one producer.
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