13 May 2010 13:19 [Source: ICIS news]
LONDON (ICIS news)--Polypropylene (PP) buyers could face more price hikes for a sixth consecutive month in June as production and feedstock issues continue to curb supply, market sources said on Thursday.
In the meantime, May is still under discussion for many accounts, they added.
“My suppliers are already talking of increases for June, irrespective of what happens to propylene,” said one frustrated buyer, adding: “Our markets can’t absorb these increases.”
“My supplier is asking for an extra €30/tonne supplement for May prices, on top of the €50/tonne we have already paid,” complained another.
“June [PP] prices will go up again,” said a major producer. “Supply is tight and that’s when prices rise.”
Some production issues were further exacerbating PP shortages caused mainly by a snug propylene monomer market. Several sources said they expected a rollover of €1,000/tonne FD (free delivered) NWE (northwest ?xml:namespace>
Total Petrochemicals declared force majeure on PP deliveries in Europe on Thursday 6 May due to propylene supply issues. The site of the force majeure restrictions was not confirmed by the producer, but market sources reported it was the Feluy, Belgium site - at 850,000 tonnes/year the largest PP production plant in
Recent reports from buyers suggest supplies from Total were better than they had initially expected, but according to observers some production issues remained. The company declined to comment.
Earlier production problems at Grangemouth in the
The high cost of spot propylene resulted in the reduction of PP at several sites. Cutbacks due to monomer tightness had been in effect for several months.
Some dissenting voices argued PP prices should be on their way down due to a recent fall in crude oil and naphtha prices and a roll-out of new capacities that was expected to have an impact on PP pricing globally. However, lower prices from western European sources were not on the agenda at present, they said.
Several large buyers reported they had not been offered any significant quantities of imported PP for prompt arrival into
“I have heard of some PP being offered at €1,160-1,170/tonne delivered to customer for June arrival from the Middle East, but this is the only deviation from the norm in the PP market in
Lowest net prices were mostly talked in the mid-€1,200s/tonne FD NWE, up from their end-December level of €890/tonne FD NWE, representing an increase of more than 30% in 2010.
PP buyers aimed to keep buying to a minimum in anticipation of a price decrease later in the year. Some predicted this would occur by August, but others were unwilling to venture a guess as they had been wrong so often in the past months.
PP producers in
($1 = €0.79)
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