Europe PO contract prices soften in December on costs

14 December 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European propylene oxide (PO) contract prices softened by around €14/tonne ($18/tonne) in December because of lower propylene feedstock costs, market players said on Friday.

To reflect this, the PO range in December has been changed to €1,516-1,632/tonne FD (free delivered) NWE (northwest Europe), according to ICIS.

Numbers below the range were also heard, but they were seen to be reflective of net rather than gross values.

Formula-related PO accounts had dropped by €13.60/tonne (rounded up to €14/tonne) in December, which represents 80% of the propylene feedstock reduction.

Freely negotiated PO business has also moved down in December in line with formula-related contracts, as lower feedstock costs have been weighed against fairly balanced market conditions.

One buyer said that larger price reductions may be possible for some freely negotiated accounts, which had been subject to larger hikes than the formula level in previous months. However, there was no other market confirmation to substantiate anything other than the formula-related price move.

PO consumption is reasonable to slow, depending on source and sector. Downstream surfactant performance is slightly softer as expected at year-end. PO-related food applications, however, remain fairly steady.

PO used in the downstream polyurethane (PU) sector continues to hold up reasonably well in eastern Europe in December. One buyer said that its PO demand into the downstream coatings and resins sectors is better than expected in the fourth quarter – which is traditionally a tough demand period and low season in Europe, but this is being offset by some additional export demand.

The PO market remains well supplied, following the slowdown in demand in some sectors and Shell Chemical’s normalised output at its PO/styrene monomer (SM) operations in the Netherlands, following the resolution of technical problems during November.

(|$1 = €0.76)

By: Heidi Finch
+44 20 8652 3214

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