Europe PP buyers facing upward pressure in September

01 September 2016 12:57 Source:ICIS News

PE and PP can be used to make plastic pipes.LONDON (ICIS)--Polypropylene (PP) buyers are facing upward price pressure in September, following the €20/tonne increase in the September propylene monomer contract, sources said on Thursday.

Some PP grades are in tight supply and sellers are limiting deliveries in some cases.

Not all players are convinced that supply is actually short, however.

“PP and C3 [propylene] are not long,” said a distributor, “but I find it hard to say that PP is short.”

Sources admitted that any margin improvement for PP producers in September would depend on the level of demand, and while August had been better than many had expected, some parts of Europe are still quiet because of the holidays.

“We haven’t had the usual calls we would normally have at the end of August,” said a reseller in southern Europe.

The buyers that had started discussions for September were finding it hard to achieve a rollover from August, however.

“Plus 20 [€/tonne] is looking realistic,” said one.

Some sellers are clearly looking for more than plus €20/tonne, which would not improve their margins.

“Some are trying to get plus 40,” said another distributor, “but it’s one thing to ask and another to get it.”

The spread between PP and propylene has slipped in recent weeks, falling in August to a low not seen since October 2015. While the spread is still higher than at the end of 2014, producers are keen to re-establish better margins.

September discussions should be well under way by next week, once buyers and sellers have returned from their holidays.

PP is used in packaging, the manufacture of household goods and also in the automotive industry.

Focus article by Linda Naylor

By Linda Naylor