21 February 2013 12:01 [Source: ICIS news]
LONDON (ICIS)--Polypropylene (PP) spot prices have been offered at lower levels in Europe this week, in spite of rising costs and speculation over the upcoming March propylene contract, but by Thursday there were signs that the situation was changing, sources said.
Demand for PP is weak and buyers say they have been offered reductions on spot prices in the past few days as sellers look to secure volumes. Lower offers are not available on a blanket basis throughout Europe, however, and there are differences between sellers and between grades of product.
“It’s not that prices have gone down on a wholesale basis this month,” said one buyer, “but there are offers in the market that just weren’t there at the beginning of the month.”
Propylene shortages at some sites have led to a tight situation for some producers, with LyondellBasell in particular said to be short on some grades.
In the middle of January, homopolymer injection spot prices were trading at €1,250-1,270/tonne FD (free delivered) NWE (northwest Europe), but by this week, although most regular business was still said to be above €1,200/tonne ($1,600/tonne) FD NWE, some buyers said they had been offered material below €1,200/tonne – even as low as €1,150/tonne FD NWE – by western European producers, if they could take sufficient volume.
Several buyers said they had been offered copolymer for prices as low as €1,200/tonne FD NWE.
These lower offers come at a time when naphtha has reached levels not seen for some time. On Thursday, it was trading at $1,005-1,007/tonne CIF (cost, insurance & freight) NWE.
On Thursday, however, there were signs that low PP spot prices had begun to disappear from the market, as producers’ stocks were empty.
“We have been told that new February volumes will be at an increase of €50/tonne by one supplier,” said one PP buyer whose monthly price had rolled over from January, in spite of the €10/tonne increase in the February propylene monomer contract.
Many sources expect the March propylene monomer contract to increase and any monomer increase is likely to be sought for PP pricing, in spite of the flat demand in the current market.
“Macro economics are really bad,” said one large buyer. “Any increase in PP will have a detrimental effect on demand.”
Producers, however, say they cannot run lines at a loss, and have little alternative but to seek price hikes.
The March propylene monomer contract is expected to settle in the coming days. The February contract stands at €1,100/tonne FD NWE. It is a gross price, subject to discounts.
PP is used widely in the packaging and household goods sectors, and also in the automotive industry.
($1 = €0.75)
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