Europe IBAP hits seven-month high

LONDON (ICIS)–The European ICIS Basket of Automotive Petrochemicals (IBAP) rose by €3.33/tonnes of total vehicle weight (TTVW) in June, ICIS analysis showed on Tuesday.

The European IBAP is at a seven-month high, and automotive petrochemical raw material costs have now been rising for four consecutive months in Europe.

The increase in the European IBAP was driven by rising polyvinyl chloride (PVC), polypropylene (PP), polyethyene (PE), and acrylonitrile butadiene rubber (ABS) prices in Europe.



The IBAP rose by similar levels in both euro and US dollar terms. In dollar terms, the Europe IBAP is now approaching parity with the US IBAP and is within $1/TTVW.

PP rises have been the key driver of European IBAP cost rises in recent months. Nevertheless, sentiment in the European polypropylene (PP) market is shifting, and most sources expect June to have been the top of the recent cycle.

Supply is not long, but smaller buyers no longer have to call several sellers to get hold of the truck they need. Some large buyers are still struggling to get all product required, particularly bi-axially oriented polypropylene (BOPP) buyers in southern Europe.

Distribution activity has stalled, and as the odd spare truck is now available to smaller buyers, they expect prices to fall. The July propylene contract settled at a reduction of €20/tonne on Thursday, at €1,010/tonne FD NWE, and some PP sellers are preparing to transfer this reduction to the PP market.

Falls in textiles costs mitigated some of the rises in euro terms. In US dollar terms, exchange rate movements meant that a small rise in polyurethane (PU) costs in June in euro terms translated to a fall in dollar terms.

PP and PE price rises resulted from continued tight supply. PVC and ABS price rises were caused by higher upstream costs in June.

Falls in textiles prices were largely the result of a €111/tonne drop in the upstream benzene contract price.

Average IBAP cost per vehicle weight class

*rounded to two decimal places

The IBAP comprises prices for PP, polyethylene (PE), ABS, nylon, polyvinyl chloride (PVC), polycarbonate (PC), isocyanates, polyols, styrene-butadiene-rubber (SBR), polyethylene terephthalate (PET), base oils and soda ash. In Asia and Europe, the IBAP additionally includes prices for polyacetal (POM) and polybutylene terephthalate (PBT), which ICIS does not cover in the US. Weightings are based on American Chemistry Council (ACC) and European Automobile Manufacturers Association (ACEA) data.

To see the Global IBAP, click here
To see the Asia IBAP, click here
To see the US IBAP, click here

ICIS has developed a prototype Global Automotive report which provides insight into global auto petrochemical markets. To receive this prototype report and be part of the ongoing development process, please email: mark.victory@icis.com

Additional reporting by Linda Naylor