Europe PP prices rise, but no shortage of supply

Source: ICIS News

2019/03/07

LONDON (ICIS)--European polypropylene (PP) prices are moving up in March, but the market is no tighter than balanced, according to most buyers.

- Propylene contract up €25/tonne

- Prebuying ahead of Brexit, cracker outages

The March propylene contract rose by €25/tonne, and most sellers have managed to pass this – or at least a large portion of this – to the market.

Hikes as high as €40/tonne have also been talked of.

Demand has been strong in the first quarter, according to several producers, although smaller sellers are not convinced because some applications, such as automotive and biaxially oriented polypropylene (BOPP), are facing tough conditions.

STOCKING UP
A certain amount of the strong demand is thought to be down to prebyuing.

A slate of planned cracker outages – which some upstream suppliers have dubbed the crunch month of May – could lead to potential supply issues, so many buyers have made provisions for this.

Planned cracker outages in 2019

Company Location Duration weeks Timing
HIPPetrohemija Pancevo 5 20 March-25 April
Shell Moerdijk 8 16 April - 21 June
BASF Antwerp 6,8 1 May-16 June
Dow Boehlen 6 May-June
BPRP Gelsenkirchen 3 6 end Aug-mid Oct
BASF Ludwigshafen 1 5 18 Aug-30 Sep
REPSOL Tarragona 6,7 Oct-Nov
SABIC Geleen 4 6 Sep-Oct
DOW Terneuzen 1 6 Sep-Oct
LyondellBasell Wesseling 4, n/a Sep-Oct
Versalis Priolo 6 Sep-Oct
INEOS Grangemouth n/a H2 2019

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Prebuying has also been prevalent in the UK, where buyers have been stocking up ahead of Brexit – whenever that may be.

Both buyers and sellers were beginning to get nervous in March, as the official Brexit date of 29 March is looming with no sign of a deal.

Any stocking in the UK will inevitably lead to a period of destocking, which might be expected to affect demand in mainland Europe as well.

In the meantime, March PP prices are rising, and in some cases the monomer/polymer spread is increasing.

PP homopolymer spot prices have moved up to the high-€1,100s/tonne FD (free delivered) NWE (northwest Europe).

“This is the first time we have seen spot prices rising above net contract prices for some months,” said one buyer.

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

Pictured: PP-made pipes
Source: LyondellBasell