21 March 2013 11:49 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS)--Polypropylene (PP) producers in Europe have managed to lift prices for March monthly business, but to less than the full €55/tonne ($71/tonne) rise in the propylene contract price, sources said on Thursday.
Spot prices, meanwhile, are trading mainly within a stable price range, sources added.
Monthly PP prices, which are settled on an individual contractual basis, have increased by around €25-30/tonne and are fully confirmed by buyers. However, producers were not able to recover the full propylene hike.
“Demand has turned out to be reasonable in March, low reasonable, but reasonable,” said one seller.
Demand has been a problem for most sellers in March and before, and production has been adjusted.
“We have reduced our output in line with demand,” said one producer, and others agreed production has been reduced in Europe to accommodate demand.
Availability of PP has also been reduced because of unplanned production problems in Europe and in certain cases propylene restrictions, so some sellers have not been in a position where they need to sell.
Expectations are now for a lower propylene contract price in April, but spot buying has been steady this week and PP prices have been stable at €1,230-1,260/tonne FD (free delivered) NWE (northwest Europe) for homopolymer injection, unlike the related polyethylene (PE) market that has seen spot prices slip this week.
“There are no widespread special deals in the [PP] market at the moment,” said a buyer.
Special offers in Europe have been limited to export in March, and this only on a small scale. Prices of €1,200/tonne CFR (cost and freight) Turkey have been heard from a limited number of European sellers. This is not confirmed by the sell side.
While some buyers expect to get lower prices in April if the new propylene contract decreases, producers are prepared to fight to keep margins, or even improve them.
The April propylene contract is expected to settle next week, when producers will have been able to assess the impact of lower naphtha prices.
($1 = €0.77)
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