27 March 2014 18:50 [Source: ICIS news]
LONDON (ICIS)--April propylene monthly contract price (MCP) discussions have stalled midway through, as the initial settlement has not received any second buyer support so far, said market players on Thursday.
The initial April propylene contract was agreed up by €10/tonne at €1,140/tonne FD (free delivered) NWE (northwest Europe), on Wednesday afternoon by one consumer and two major sellers.
However, other buyers are dissatisfied with the upward movement, considering that a rollover would be more acceptable from a downstream perspective.
One customer in the polymer sector said that the rise in the initial contract price further impacts already low downstream margins and it is also likely to attract derivative imports into the region for certain products.
Another customer in the same sector said it has not followed the initial MCP so far, as it considers a rollover to be a “fair compromise”.
A third customer, albeit in the non-polymer sector, said it had wanted to see price decreases on the April MCP, but was prepared to compromise at a rollover.
This customer said that some relief in feedstock costs since the start of the year has not been passed on downstream and it wanted to get some compensation for this. It added that an increase is also likely to make European derivatives ability to compete globally even more challenging.
It, however, said that weighing these factors against the tight supply for propylene in Europe, it would, however, be willing to accept some price stability.
Sellers, however, remain firm on a price increase. One major supplier said it was prepared to sit it out, stating that accepting a rollover was “out of the question”. It said “plus €10/tonne is not enough and it should be plus €30-40/tonne.” It suggested that plus €10/tonne was the minimum increase it was prepared to accept. It attributed this to the fact that polymer grade propylene (PGP) spot is trading above the contract price level and European propylene supply is tight.
One of the initial settling sellers said it had not yet reached anagreement with any other contract party and suggested that there was still time until the close of the month, on Monday.
One buyer, however, said that the delay in reaching a final agreement is problematic as it is leaving market players “in limbo".
In other news, the European April ethylene contract price was fully agreed on Wednesday afternoon at €1,165/tonne FD NWE, down by €15/tonne from March.
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