Europe PP spot prices up further in tight market

24 May 2013 11:39  [Source: ICIS news]

LONDON (ICIS)--European polypropylene (PP) spot prices are higher on tighter availability and improved demand, sources said on Friday.

“Our PP demand has been 10% more than forecast for May,” said one producer.

Most sellers said May demand had been the highest for many months and with production running at 70% in some cases, this has led to a sharp tightening of availability.

The rise in spot prices is in contrast to the decrease in monthly prices which fell in line with the €80/tonne ($104/tonne) drop in the May propylene contract price earlier in the month.

Producers are now retreating from this valuation as the supply/demand balance has changed dramatically, and many are now offering a much lower decrease for May business, even though most business has already settled.

“We are adding €50/tonne to new sales in May,” said another producer.

Spot homopolymer injection prices have reached €1,200/tonne FD (free delivered) NWE (northwest Europe) in many cases now, from €1,120/tonne FD NWE earlier in the month.

Producers are now considering their options for June business and see the possibility of a price rise as most stocks are low at both the buyer and producer level.

Converters said any upturn in pricing will not last long, however, as market fundamentals have not changed. European economies remain weak and the current tightening effect is based on drastic action taken by producers.

Most players are now waiting for the settlement of the June propylene contract price to give direction to the June PP market.

“The jury’s out on next month," said one large buyer. “If propylene rolls over I can’t see PP prices going up next month. We will resist any attempt from producers to improve margin.”

PP is used widely in packaging and the manufacture of household goods. It is also used in the automotive sector.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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