Europe Oct PP down €10/t on hesitant buying, lower upstream prices

14 October 2011 23:59  [Source: ICIS news]

SINGAPORE (ICIS)--Domestic prices in the European polypropylene (PP) market during October have edged down by €10/tonne ($14/tonne), as hesitant buying interest and sliding upstream prices weigh heavily on sentiment, sources said on Friday.

Producers were unable to hold on to the €10/tonne reduction in upstream propylene values, as an oversupply of PP from both local and import sources, coupled with the wide disparity between spot and contract values, forced several sellers to decrease offers in order to tempt buyers back into the market.

The movement left gross homopolymer raffia PP prices at €1,300-1,310/tonne FD (free delivered) EU (Europe) – which are subject to discount and rebates – against net spot prices of €1,120-1,150/tonne FD NWE (northwest Europe), according to ICIS.

Many negotiations were ongoing this week, with buyers opting to hold off committing to purchases until later in the month, citing expectations that sentiment would weaken towards the end of October.

“We have not settled anything yet and will not until prices come down further,” a large consumer said. “Even with a €10/tonne reduction the price is still too high and there is pressure on the market. I will not settle before the end of the month.”  

This was echoed by a producer who conceded that pressure on the market is growing as the month wears on: “We were forced to give away the propylene decrease, but customers are now asking for more; as much as minus €30/tonne.”

One PP converter said it had already closed several deals with total reductions of €30/tonne with more than one supplier, but this was not widely reflected.

Several producers lamented that aggressive import offers, particularly on homopolymer raffia PP grades, were likely to force prices down further as there was no opportunity to export material, adding further length to the domestic market.

However, with operating rates now being cut, numerous suppliers are optimistic they will quickly work through stocks, creating a better balance in the market.

One producer said: “We have nearly sold out for the month already. We received nearly 85% of our orders in the first two weeks of the month, which is very promising. Our October demand is already better than the levels we saw in September.”

($1 = €0.72)

For more on PP visit ICIS chemical intelligence

By: Stephanie Wilson
+44 20 8652 3214

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