17 June 2013 11:39 [Source: ICIS news]
LONDON (ICIS)--European polypropylene (PP) buyers are facing increases for June and although business is not fully settled for the month, most admit that there is little hope of avoiding a hike, sources said on Monday.
Producers targeted increases following the €15/tonne ($20/tonne) rise in the June propylene contract price, and much PP business is being done above the propylene rise.
“We are facing pressure to pay a €30/tonne increase for June. I will keep trying for €20/tonne,” said one buyer.
“Discussions with our suppliers are at plus €30/tonne for the time being,” said another.
Despite other buyers being hopeful of still only getting the monomer increase of €15/tonne, producers have so far been unwilling to confirm such a low hike.
“Our minimum increase is €30/tonne, and we have business at plus €40/tonne too,” said one major PP producer.
INEOS last week closed its PP order books for June, as demand outstripped supply.
This followed a stronger-than-expected May after months of cutbacks, brought about by several months of low volumes. Production was as low as 70% at some polymer and cracker production units, but now rates were increasing on downstream PP and polyethylene (PE) demand.
“We have seen a lot of pent-up demand in June that has surprised us,” said another PP producer.
Stocks remain low with buyers and sellers in Europe, but buyers have not complained of not being able to get the material they need and see the market as well balanced.
Most sources expect a small increase in the July propylene contract price and sellers could be expected to attempt to transfer this onto July PP prices, or even to improve margin, but much depends on the level of demand in July.
Buyers are not expected to leave high stocks in warehouses when they leave for holiday as the outlook is uncertain.
PP homopolymer spot prices are trading around €1,230-1,250/tonne FD (free delivered) NWE (northwest Europe) on a net basis.
PP is used widely in packaging and household goods sectors and also in the automotive industry.
($1 = €0.75)
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