Europe PO contract moves in line with formula despite shortage

11 July 2014 23:59 Source:ICIS News

LONDON (ICIS)--The European July propylene oxide (PO) contract price moved in line with 80% of the propylene settlement, or €12/tonne, on both ends despite a significant supply shortfall caused by last month’s explosion at Shell’s joint venture PO/styrene monomer (SM) unit in Moerdijk, the Netherlands, sources said on Friday.

A producer noted the contracts were settled prior to the Moerdijk explosion and cannot be altered, however spot prices are significantly higher now than in May and there has been an uptick in requests for spot volumes.

According to ICIS methodology, freely-negotiated spot business is also taken into consideration in the assessed range, however no spot deals were confirmed on the buy side at the time of writing.

Demand is said to be stable-to-strong, depending on the derivative, however the market is now overwhelmingly supply driven.

The July range firmed to €1,574-1,690/tonne free delivered (FD) northwest Europe (NWE).

By Stefan Naidu