FocusEurope PP speculative buyers find no joy in November

15 November 2013 12:53  [Source: ICIS news]

By Linda Naylor

Europe PPLONDON (ICIS)--Polypropylene (PP) buyers coming to the market in Europe bottom-picking for low-priced offers in November are being disappointed, players said on Friday.

Spot prices were difficult to place as so little spot business was being done. Bids for homopolymer injection were below €1,200/tonne ($1,622/tonne) FD (free delivered) NWE (northwest Europe) but sellers were not willing to go so low.

“I will certainly not be making a sacrifice on price when it is absolutely not justified,” said one trader who had received bids at €1,180/tonne FD NWE.

These levels had been done early in October but it was widely accepted that such prices were no longer available as sentiment firmed.

In spite of the firmer mood in the market, November PP monthly prices have fallen by around €30/tonne, in line with the drop in the November propylene contract.

Propylene supply issues and a case of force majeure in the UK led to tightness with some producers who also saw no reason to sell low.

“We saw destocking in August, hand-to-mouth buying in September and October, and restocking in November,” said one producer.  “We can’t sell spot, we are too tight.”

“Converters arrived at the end of October with no stocks, thinking they would be able to buy at very low prices in November, but it just isn’t happening,” said a distributor.

Cracker production rates have been cut for some time and propylene is more affected than ethylene.

Some PP players, looking at the upward naphtha trend, could even envisage a price increase in December.

At noon on Friday, naphtha was trading at $938-940/tonne CIF (cost insurance freight) NWE, from last Friday’s close of $908-909/tonne CIF NWE.

Buyers are not convinced that prices will rise in December, as lines will be closed for holidays and many converters will be watching working capital closely at the end of the financial year in many cases.

Production cutbacks are expected to continue at the producer level to avoid oversupply, however, and most players are aware that January PP prices have risen for the past five years.

($1 = €0.74)

By: Linda Naylor
+44 20 8652 3214

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