Europe PO contract prices soften in November on cost relief

23 November 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European propylene oxide (PO) contract prices have softened by €16/tonne ($21/tonne) in November on lower propylene feedstock costs, market players said on Friday.

This marks the second consecutive price reduction for PO following the downtrend in propylene feedstock costs over the last two months.

Formula-related PO contract prices have decreased by €16/tonne in November, in line with 80% of the propylene feedstock reduction.

However, PO freely-negotiated business also followed a similar downward move in November to that seen for formula-related contracts, as lower feedstock costs were weighed against fairly balanced market conditions.

The €16/tonne reduction takes the European PO price range to €1,530-1,646/tonne FD NWE, according to ICIS.

Numbers below the range were also heard in November in a few cases, but they were not widely confirmed.

The PO market is largely balanced, but this could lengthen in December with the seasonal slowdown at year-end in some end-sectors such as construction.

However, some suggest that any slowdown in demand and possible lengthening in PO supply could be mitigated to some extent by a seasonal uptick in demand from the downstream de-icer and antifreeze sectors during the winter, depending on capacity and profitability.

A stricter legislative drive for thicker insulation to boost energy could also help offset the economic or seasonal related slowdown to some extent in the polyurethane (PU) sector.

There is also growth potential for PUs in the emerging market of eastern Europe, which helps to support demand when compared with the more mature northwest European market.

PO demand is generally holding up reasonably well across most sectors, albeit with some signs of seasonal slowdown in line with expectations for the time of year.

($1 = €0.78)

By: Heidi Finch
+44 20 8652 3214

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