Costs force Europe PO contract prices up in March

15 March 2013 20:24  [Source: ICIS news]

LONDON (ICIS)—European propylene oxide (PO) contract prices have firmed by €44/tonne ($57/tonne) in March on the back of higher upstream propylene costs, market players said on Friday.

To reflect this, the PO price range in March has been moved up to €1,558-1,674/tonne FD (free delivered) NWE (northwest Europe).

For PO formula related business, prices traditionally move in line with 80% of feedstock propylene.

For freely negotiated PO business, prices also increased by the same level as for formula accounts, as higher upstream costs were weighed against fairly balanced market conditions.

One PO customer said it has not been involved in the PO freely negotiated business but suggested that an increase lower than the formula related hike is likely amid what it considers modest to soft demand. However, that opinion was not confirmed by others.

The PO market is largely in balance. By contrast, one buyer said the product's supply is plentiful, although one producer said it is on the tight side because of upstream cracker and PO plant turnarounds in the next few months and some seasonal improvement in downstream demand.

Other market players, though, said they do not see any tightness in the market but will closely monitor supply in the next few months, because of both upstream and PO maintenance turnarounds and the expected seasonal uplift in demand traditionally seen during the second quarter.

However, some players questioned whether there will be any tightness because the turnarounds are planned, there are some downstream polyol maintenances at similar times and it remains to be seen to what extent there will be a seasonal pick-up, depending on how the economy pans out.

In production news, INEOS’s Cologne, Germany, PO facility is expected to undergo planned maintenance for a few weeks starting in the second half of April.

There is some market talk that maintenance could also take place at LyondellBasell’s PO operations in Europe at the end of March and into April. However, this could not be confirmed at source.

($1=€0.77)


By: Heidi Finch
+44 20 8652 3214



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