Europe PP production problems lead to force majeure: sources

09 July 2013 12:50  [Source: ICIS news]

LONDON (ICIS)--Polypropylene (PP) production issues in Europe have led to cases of force majeure, according to industry sources on Tuesday, but there has been no great impact on pricing so far.

“We were informed of force majeure by one of our suppliers,” said one large buyer, “but we could get all we needed.”

Production issues at Austria-headquartered Borealis's site in Burghausen, Germany, and Dutch firm LyondellBasell’s site at Wesseling, also in Germany, were widely considered to be at the root of the force majeures declared this week, but there was no confirmation from the companies involved.

PP producers are targeting higher prices in July, but it was unclear whether demand would support any significant upward move. Sources saw more potential upward pressure from increasing upstream naphtha prices than from any shortage in the European PP sector.

“[The problems] won’t have a massive effect; the market in general is well supplied,” said one producer.

“Low-end numbers might be adjusted upwards,” said a spot seller, which went on to describe the market as flat. “But there is no fundamental difference. Big players are now starting to think about September.”

PP homopolymer injection prices were hovering around €1,200/tonne ($1,538/tonne) FD (free delivered) NWE (northwest Europe) at the low end of business, and this week’s issues have had little effect in this sector.

Sellers expected to be able to push monthly pricing levels up, however. A couple of major producers said July orders were ahead of forecast, and they put this down to production problems having an impact on availability.

Several buyers said they had experienced no issues at all, however, suggesting that only certain grades in certain regions were being affected by these problems.

“I have had no spot offers at all this month,” said another large buyer, indicating that some production issues could be affecting availability, “but I have had no availability issues... I expect the market to be in the doldrums for the next six weeks.”

Several sources saw the impact of strengthening crude and naphtha prices as a stronger impetus for higher prices than the current production issues.

PP is used widely in the packaging and household goods sectors and also in the automotive sector.

($1 = €0.78)

By: Linda Naylor
+44 20 8652 3214

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