Europe PP spot prices rise as availability tightens

16 May 2013 12:05  [Source: ICIS news]

LONDON (ICIS)--European polypropylene (PP) spot prices are increasing this week as buyers take the precaution of buying ahead of a possible increase in June and sellers take advantage of the fine supply-demand balance to raise prices, sources said on Thursday.

Spot homopolymer injection levels have risen from €1,100/tonne ($1,410/tonne) FD (free delivered) NWE (northwest Europe) and above in early May, to the high €1,100s/tonne FD NWE and even above from western European sources, according to some buyers.

Imported spot prices are lower, in the mid-€1,100s/tonne FD NWE, but some traders are also withdrawing offers to see if they can get higher prices for their material in June.

“If prices go up in June it won’t be based on any fundamental strength in the market,” said one buyer.

Others agreed that it was production cutbacks that had created the current flurry of concern over product availability, and sources questioned how long any upturn could be sustained.

In the meantime monthly prices have dropped, sometimes by as much as the €80/tonne decline in the May propylene contract price, while some sellers attempt to limit margin erosion by holding on to a portion, albeit small, of the monomer drop.

The reluctance of some suppliers to give away the full €80/tonne monomer decrease during the second half of the month is based on tightening availability as some buyers come back to replenish empty stocks.

PP is used widely in the packaging sector, the manufacture of household goods and in the automotive industry.

($1 = €0.78)

By: Linda Naylor
+44 20 8652 3214

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