Europe PP spot prices edge up to seven-month high

LONDON (ICIS)–European polypropylene (PP) spot prices have edged up to levels not seen since September 2013 this week, sources said on Friday.

Homopolymer injection prices are now at €1,280/tonne FD (free delivered) NWE (northwest Europe) minimum. The last time this minimum level was reached was during the week ending 13 September 2013.

By November 2013, spot prices had fallen to €1,200/tonne minimum, rising to €1,260/tonne in January 2014, and have traded largely within this band in recent months.

Tightness in the propylene market, better-than-expected demand in the PP sector and some production issues, including those linked to propylene availability, have led to the steady rise in PP spot prices.

“We are seeing several things coinciding to make us expect a strong May,” said one producer.

“There is optimism over signals in the economy; the seasonal demand in the packaging sector should be strong; demand in Turkey is increasing; there are fewer imports since the increase of duty from GCC countries, and there are limited exports from Asia.”

May pricing was not yet up for discussion, as many regions in Europe were still on holiday, but a wide range of approaches was discussed in the market when it came to pricing targets for May.

Targeted increases are initially between €20-60/tonne on top of April pricing.

“Demand is nothing special,” said one producer which expected only a small upward move this month.

“We are not in volume-push mode,” said another. “We are targeting €40/tonne [up].”

Yet another said it would be seeking a €60/tonne increase.

PP production is reduced, often because of monomer availability issues, but some players expected these to ease during May.

Serious pricing discussions are expected to begin next week.