PP film buyer makes plea to Europe producers for stability, security

16 May 2012 13:06  [Source: ICIS news]

PP film is widely used in the packaging industryBRUSSELS (ICIS)--European polypropylene (PP) producers must ensure future security and stability if all players in the market are to flourish, a PP film buyer said on Wednesday.

Ian Robinson, purchasing director for Innovia Films, made the plea to producers at the ICIS World Polyolefins Conference. “I represent the BOPP [biaxially oriented PP] sector but what I am saying is relevant for 95% of polyethylene (PE) and PP buyers as well,” he said.

Robinson said that volatility in PP pricing has increased significantly since the onset of monthly propylene price in January 2009.

“Producers have been very efficient in passing the monomer movement straight on to converters. We are the shock absorbers between the upstream volatility and downstream stability at the consumer level.”

PP prices have been particularly volatile in 2012 in Europe and have risen by over 30% in the first four months of the year, from a very low base in December 2011.

By April, demand was severely affected by the high prices of the market and the expectation of lower monomer contracts in May. The May propylene contract price has fallen by only €15/tonne ($19/tonne), and buying has continued on a hand-to-mouth basis, as June prices are likely to fall again.

“Some of our customers are demanding 12-month fixed prices,” said Robinson, “and monomer costs are driving our prices.”

“Producers have solved volatility and walked away from it. It shouldn’t just be the converter who has to deal with it. We want stability and security of supply.”

He admitted that the relationship between buyers and sellers was a two-way process, and that both should benefit.

“There is mutual dependency in all this. We both need each other. If we continue in this way the customer base will shrink.”

May PP prices are under downward pressure, losing more than the €15/tonne fall in the May propylene contract price.

Another converter at the conference supported Robinson's view.

“I have been granted decreases of €60/tonne already in May, meaning that producers have lost more than they achieved in April. This is not really what we want. Stability at a lower level would have been preferable,” said another PP buyer who also buys polyethylene (PE).

($1 = €0.79)

By: Linda Naylor
+44 20 8652 3214

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