Europe PO prices rise in March for third month in a row on costs

16 March 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--Rising propylene feedstock costs continue to push up European propylene oxide (PO) prices into March, said market players on Friday.

This marks the third successive price increase for PO since the start of the year, according to ICIS records.

While players reported price increases of €72/tonne ($95/tonne) for formula-related and freely negotiated contract PO business in March, in line with 80% of the propylene feedstock movement, there was some discrepancy with absolute numbers.

Prices as assessed by ICIS in March within the range of €1,590-1,700/tonne FD (free delivered) NWE (northwest Europe). This represented increases of €37-44/tonne from last month. Numbers below the range were also heard, but this was not seen to reflect the general market level.

By contrast, one producer said it had secured business above €1,700/tonne FD, reporting prices up to the mid €1,700s/tonne FD NWE, although there was insufficient market confirmation to substantiate line

PO demand is holding up, marking an improvement versus the end of 2011. One buyer said that while demand has picked up since the start of the year, it is still below the same period last year because of economic uncertainty. Producers, however, maintain that consumption remain in line with their forecasts, particularly in the downstream polyurethane sectors.

PO supply is balanced to tight, depending on source. Some sellers maintain that the market is tight, because of recent cracker and PO production problems, as well as good demand. One manufacturer, however, acknowledges that the tightness seen in the first few weeks of March have subsided and the market is moving more balanced, following the resolution of recent production problems.

Buyers maintain that they been sufficiently covered, without any restriction, despite recent output constraints.

In manufacturing news, there was talk that the minor technical problems at LyondellBasell’s PO operations in the Netherlands, which were experienced last week, had since been resolved.

INEOS has increased its PO operations at Cologne, Germany, following resumed output at its No.4 cracker, although its PO rates remain reduced. In February, INEOS was forced to limit its PO output at its Germany site, because of cracker problems.

Production at Shell Chemical’s Moerdjik cracker in the Netherlands is increasing, following some recent technical limitations, although there is some talk in the PO market that Shell Chemical remain cautious on stock levels.


By: Heidi Finch
+44 20 8652 3214

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