Price and market trends: Europe plasticizer producers seek price hikes on higher propylene

09 August 2013 09:28  [Source: ICB]

Buyers are more bearish, with one saying it has agreed stable prices for August in line with spot prices

The confirmation of the August propylene contract price at a €50/tonne ($67/tonne) increase prompted a range of responses from participants in the downstream European plasticizers market on 31 July.

Some producers plan to pass on the cost increases, but are encountering resistance, with buyers emphasising that the peak summer holiday season will reduce demand in August.

Spot prices were assessed by ICIS on 31 July at €1,520-1,560/tonne FD (free delivered) NWE (northwest Europe) for dioctyl phthalate (DOP), €1,550-1,590/tonne for diisononyl phthalate (DINP), €1,590-1,630/tonne FD NWE for dipropyl heptyl phthalate plasticizer (DPHP), and €1,530-1,580/tonne FD NWE for dioctyl terephthalate (DOTP).

One DOTP producer said its target was plus €25/tonne for August, but it had achieved increases of €10-20/tonne and some rollovers. The source said this outcome exceeded its expectations.

The producer said demand was good in July, and August looks promising. While August is not an easy month in which to secure price increases, the source said, there might be opportunities for further rises in September.

Most of its DOTP business falls towards the low end of the assessed range, the producer added.

A second DOTP producer said it will target increases of €25/tonne, but was not sure if this will be achievable in August. The source noted that demand for all plasticizers is quite good and there are no supply problems.

A DOP producer said it had revised its initial price targets of plus €20-30/tonne to rollovers and small increases, which it felt was reflective of the wider market for August.

A second DOP producer said its minimum price target for August is plus €30/tonne, but acknowledged that negotiations could be protracted owing to the start of the holiday season in southern Europe.

Competition from producers of other grades of plasticizers also has to be taken into account, the source said.

A DPHP producer said it has announced increases of €30/tonne for August. The source said it can be a difficult season to raise prices, but it needs to improve its margins, and any increases not agreed in August will be postponed to September.

A DINP producer said the market is quiet and demand is not too bad. The source said it expects little change in prices for August, but increases might be possible in September.

A Turkish producer of DOP and DINP said that the propylene increase was larger than it had ­expected and a sharp rise in plasticizer prices is likely once the holiday season is over. The source described stable demand.

Another Turkish producer said that the DOTP market is balanced to long with some export opportunities. While it was too early to comment on prices for August, the source indicated recent price levels at €1,440-1,450/tonne FD Turkey and around €1,500/tonne FD Europe for both DOP and DOTP.

Buyers offered a more bearish perspective, with one saying it has agreed stable prices for August in line with the spot price ranges assessed by ICIS, having initially targeted decreases in some cases.

Another buyer confirmed that its prices for DOP and DINP are in line with the ICIS spot price ­assessments and said that the market is too weak to support the price increases that producers are targeting.

A third buyer said the propylene rise was larger than it had expected and two plasticizer suppliers said they would have to raise their prices by €5-10/tonne.

By: Samuel Weatherlake
+44 20 8652 3214

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