European polypropylene contract prices
Polypropylene (PP) has key applications in packaging, fibers and automotive parts. PP can be extruded for pipe, conduit, wire and cable, while atactic PP has outlets in paper laminating, sealants and adhesives.
After a strong market in 2007, with steady growth of 4.5-5%, Europe is struggling this year. Demand is poor and supply has lengthened from rising import volumes, while the weak dollar has curtailed exports. Several outages across Europe and the opening of an arbitrage window with Asia in May/June provided some support.
Older capacity is being replaced with modern process plants. Netherlands-based LyondellBasell and UK-headquartered INEOS Polyolefins shut plants in mid-2007 at Pernis, the Netherlands, and Geel, Belgium, respectively, removing 440,000 tonnes/year of capacity.
INEOS will close more capacity in Norway and France by the end of 2008 and the end of 2009, respectively, but is raising output in Geel, Belgium, by 220,000 tonnes/year in 2009. Output was also debottlenecked in Grangemouth, UK, by 50,000 tonnes/year and in Lavera, France, by 10,000 tonnes/year. Austrian-headquartered Borealis started up a 330,000 tonne/year unit in Burghausen, Germany, in late 2007. Several new plants in Saudi Arabia and Iran are going online in 2008.
European prices have fallen consistently in 2008, and so have margins. Contract prices in early July were €1,250-1,270/tonne for injection moulding, with copolymer at €1,300-1,320/tonne and expected to rise.
Producers are seeking hikes of €100-150/tonne in July, but players were waiting for propylene contracts to settle first, where a steep increase is expected because of the upsurge in crude oil and naphtha.
The dominant licensed process is Spheripol (LyondellBasell), which combines bulk phase polymerization in tubular loop reactors with gas-phase polymerization. Borealis has adapted its Borstar bimodal polyethylene (PE) process to make PP. Higher activity catalysts have enabled the introduction of gas-phase technology, which operates with lower-purity propylene and at lower costs.
Development work has focused on metallocene catalysts to improve the resins' properties. LyondellBasell has developed a fluid bed, multi-zone circulating reactor called Spherizone that can generate different materials and extend the range of properties.
An extra 19m tonnes/year of PP capacity will be added globally by 2012. Half of this total is planned in Asia and 6m tonnes/year will be in the Middle East, which will replace South Korea this year as the world's largest PP exporter.
Global demand is predicted by global consultancy CMAI at just under 6%/year to 2012, with most growth from developing regions such as China and India. In Western Europe, demand will grow at 4%/year and the region will become a net importer by 2009. Central and East European markets will grow faster at 5-7%/year.
Closure of unprofitable operations in Western Europe will continue as producers with uncompetitive costs will be unable to maintain their export positions.
MAJOR EUROPEAN POLYPROPYLENE CAPACITY*, '000
TONNES/YEAR *excludes plants under
|AOZT Polypropylene||Ufa, Russia||100|
|Basell Orlen Polyolefins||Plock, Poland||400|
|Domo Polypropylene||Rozenburg, Netherlands||180|
|Dow Chemical||Cologne, Germany||195|
|Eko Chemicals||Thessaloniki, Greece||180|
|Notre-Dame de Gravenchon, France||170|
|INEOS Polyolefins||Antwerp, Belgium||130|
|LyondellBasell Industries||Berre, France||350|
|Moscow Oil Refinery||Moscow, Russia||100|
|Repsol YPF||Puertollano, Spain||120|
|SABIC Europe||Geleen, Netherlands||600|
|Tiszai VegyiKombinat||Tiszaujvaros, Hungary||280|
|Total Petrochemicals||Feluy, Belgium||800|
|Total Petro-chemicals/INEOS||Lavera, France||300|
|Unipetrol||Litvinov, Czech Republic||275|
Profile last published January 9, 2006
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