17 January 2011 12:05 [Source: ICIS news]
LONDON (ICIS)--Polypropylene (PP) prices in Europe have reached a new record high as producers push levels up following a hefty increase in propylene prices in a market free from the competition of imports, market sources said on Monday.
Net homopolymer injection PP prices were trading at €1,280-1,310/tonne FD (free delivered) NWE (northwest Europe) in January but several buyers said that they were being cautious this month, despite warnings of yet more hikes in February.
Producers took a different stance when settling January business, with some settling for slightly less than the €110/tonne ($147/tonne) increase in the propylene monomer contract price, which settled at €1,070/tonne FD NWE.
Others were less flexible.
"If they don't want to buy at plus €110/tonne, I'll keep my product and sell it for more in February," said one producer.
Another ventured an explanation as to why not all producers were pushing for the full propylene increase of €110/tonne.
"Margins have been healthier in PP than in PE [polyethylene]. That could explain why some sellers are happy with something less than the €110/tonne," it said.
However, concessions below the €110/tonne target were not great.
"I've not settled yet and am discussing between plus €90 and plus €100 [a tonne]," said one buyer.
Levels had been at €1,250-1,310/tonne FD NWE in July 2010, and in July 2008 had reached €1,250-1,260/tonne FD NWE, when Brent crude oil was at a record high of $147/bbl. Brent crude was trading at $97.84/bbl on Monday morning.There was evidence of pre-buying of PP in December 2010 as some buyers planned not to buy at all in January.
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