Europe April PO prices rise on propylene cost increase

20 April 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European propylene oxide (PO) prices have risen by €40/tonne ($53/tonne), for April, representing 80% of the €50/tonne hike in upstream propylene costs, market players said on Friday.

This is the fourth successive price increase for PO since the start of the year, and brings prices into the range of €1,630–1,740/tonne FD (free delivered) NWE (northwest Europe).

While most PO prices move on a formula related to feedstock propylene, sources said that freely negotiated prices have followed the same trend for April business.

Buyers confirmed the €40/tonne increase for April. One said its formula-based April price was finalised at €1,580/tonne FD NWE, and described demand as stable and availability as good.

But another buyer said successive hikes in PO prices are causing derivative products to become increasingly uncompetitive.

Overall demand for PO remains firm, with surfactants being the strongest downstream sector.

Offtake from the automotive industry is also strong, driven by exports of European-made cars to Asia.

There are expectations that demand from the construction sector will pick up with the arrival of warmer weather, but weakness in the wider European economy remains a concern.

In production news, reports that Shell declared force majeure on styrene last week from its styrene/PO site in Moerdijk, the Netherlands, remain unconfirmed by the producer.

Another producer said it did not expect the force majeure would last long, and doubted that it would have a significant impact on the PO market.

Nameplate capacities at Shell Chemical’s Moerdijk site are 440,000 tonnes/year for styrene and 210,000 tonnes/year for PO, according to ICIS data.

($1 = €0.76)

By: Samuel Weatherlake
+44 20 8652 3214

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