Price and market trends: Europe June polypropylene sellers confident in tight market

23 June 2014 00:00 Source:ICIS Chemical Business

Polypropylene (PP) sellers in Europe are increasing prices steadily in June, and product availability remains tight, sources said on 12 June.

“We have not sold one pellet below monomer,” said a producer, adding that most business had been done at €15-20/tonne above that of May.

Only high-end business was said to be settling at an increase in line with the €10/tonne rise in the June propylene monomer price, while other buyers were faced with stronger hikes. Several large buyers were still attempting to settle at plus €10/tonne over May but now minimum price levels were increasing as sellers’ inventories were low, and they saw little need to let product go at what they saw as low prices.

EU PP

Typically homopolymer injection sales had been at €1,300/tonne FD (free delivered) NWE (northwest Europe) on a net basis last week, but at least one seller was now offering commodity grades at no lower than €1,320/tonne. There was no evidence of actual shortages in the PP market, but sellers were taking advantage of the tight situation to push prices up wherever possible. Some buyers were not ready to pay what they saw as higher-than-market levels for extra volumes, so stood on the sidelines.

Availability has tightened in recent months, firstly because of propylene shortages that curtailed supply at several plants, and the ongoing maintenance at Total Petrochemicals’ Feluy PP site in Belgium, Europe’s largest production site at 900,000 tonnes/year, is also having an impact on supply.

The maintenance outage was planned, but sources said production had been reduced for some time before the outage, meaning that the company could not build stocks in advance. Total Petrochemicals has not confirmed the status of the plants or its inventory position.

“There’s not much prime around,” said a potential buyer of supplementary volumes for June. “They are not pushing. There are no special offers and we don’t expect any this month. There is no pressure to sell.”

A lack of imports was adding to the tight PP situation in Europe in June, and traders were generally short of workable offers for Europe.

Sources were watching developments in the upstream propylene monomer market closely, and lower spot prices were leading to some expectations of a lower monomer contract for July.

This was not a given however, as high monomer spot prices in May, sometimes higher than the contract, had led to only minimal changes in the June propylene contract. Most monomer sources said it was too early to tell where July propylene would land but several said cracker margins were still unsustainably low.

By Linda Naylor