Europe July PO falls €136/tonne on lower propylene

13 July 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European propylene oxide (PO) contracts for July have dropped by €136/tonne ($166/tonne) because of lower propylene costs, market players said on Friday.

The €170/tonne decrease in European propylene feedstock contract price in July translates into a reduction of €136/tonne for formula-related PO business, which is based on 80% of the propylene movement.

PO freely negotiated contract prices also followed the same downward price trend as seen on formula-related contracts.

To reflect the €136/tonne drop, the PO range has been changed to €1,382-1,492/tonne FD (free delivered) NWE (northwest Europe), according to ICIS.

Numbers on either side of the range were also heard, but they were not widely confirmed.

The European PO market remains well-supplied and demand continues to fare reasonably well, despite the economic uncertainty and the quieter summer holiday period in Europe.

PO into the downstream polyurethane and synthetic-lubricant sectors were seen as particularly healthy. PO in starch-based food applications and flame retardants remains relatively steady.

Exports for certain PO derivatives are also starting to pick up, based on favourable exchange rates and the significant reduction in the European propylene contract price.

Views on downstream surfactant demand, however, were mixed.

One buyer said its demand remained slow since the second quarter, stating that it had seen a seasonal slowdown earlier than expected this year, because of underlying macroeconomic concerns.

Another customer said its demand is good, despite the economic uncertainty and summer holidays in Europe, which it attributed to some possible restocking activity, particularly in view of a possible increase in propylene feedstock costs, if a rebound in upstream naphtha were to continue.

($1 = €0.82)

By: Heidi Finch
+44 20 8652 3214

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