Europe PP players gauge extent of September price drop

Linda Naylor

29-Aug-2014

LONDON (ICIS)–Players in the European polypropylene (PP) sector are discussing how much of the €50/tonne drop in the September propylene contract price will be transferred to PP prices next month, sources said on Friday.

The September propylene contract settled at €1,105/tonne FD (free delivered) NWE (northwest Europe), down by €50/tonne, and was fully confirmed on Friday.

“We are trying to keep some of the monomer drop,” said one producer, while buyers were confident of achieving a decrease in line with the monomer drop.

August discussions had not been easy for buyers, many of whom had expected to be able to get a decrease larger than the €20/tonne drop in August propylene prices.

I’m still struggling to get prices down by…more than €20[/tonne] in August,” said one late settler. No discounts greater than €20/tonne have been confirmed.

The PP market has been well balanced in spite of reduced August demand on the back of buyer confidence of lower prices in September.

Some planned PP shutdowns in the coming weeks are expected to maintain the balance, and sources hoped that the relatively substantial drop in propylene prices would boost September buying interest.

Some sellers saw the potential to recover in September and, as prices rise again for naphtha, they were loath to give away the full monomer amount in the face of a potential increase in feedstock costs.

“We will try to limit the drop to €30-35/tonne,” said another producer, while another talked of minus-€40/tonne for September.

Spot prices were difficult to gauge as business was sparse, but earlier levels of €1,290-1,330/tonne FD NWE for homopolymer injection were expected to drop in the coming week.

PP is used widely in packaging, the manufacture of household gods and in the automotive sector.

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