Europe PP producers target margin improvement in July

28 June 2013 10:12  [Source: ICIS news]

LONDON (ICIS)--Polypropylene (PP) producers in Europe intend to improve margins in July, in spite of the rollover of the upstream propylene monomer contract, several said on Friday.

“We’ll be going for plus €30-50/tonne,” said one producer. Another said: “We will announce €30/tonne.”

The PP market is seen as balanced, but many buyers do not expect to be paying higher prices next month. Most said they had experienced no supply problems in June and they expected none in July.

Cracker output has increased since May, as May downstream demand improved drastically when buyers returned to the market to replenish empty stocks.

Good demand has continued into June, but now some sources expect it to slow down as the holiday season comes into play, and buyers’ stocks have returned to a workable level.

Inventories with producers are generally low, but an upturn in PP production can be expected alongside an increase in cracker output, said sources.

June PP prices rose by a minimum of €25/tonne ($32/tonne), with some low-priced accounts taking as much as €40/tonne, but buyers were in no hurry to commit for July yet.

The June propylene contact rose by €15/tonne, so producers were able to improve margins slightly in June, as PP prices increased by more than the monomer.

Homopolymer prices are trading around €1,200-1,220/tonne FD (free delivered) NWE (northwest Europe) on a net basis.

PP is used widely in packaging and automotive sectors and the manufacture of household goods.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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