Europe PP contracted volumes strong for June so far, all eyes upstream

Author: Linda Naylor


LONDON (ICIS)--Polypropylene (PP) demand for early June contracted volumes is good, but it is not clear how long this will last, given the sharp drop in naphtha prices in the past week.

- Strong June demand for contracted volumes so far

- Naphtha prices slump

- Smaller PP buyers destocking

VARIOUSNaphtha - a leading driver of propylene prices - has fallen around $100/tonne since mid-May, and PP players are counting on this impacting the July contract price if there is no rally.

As naphtha prices are taken into account as one of the principal elements when discussing upstream monomer contracts, such a sizeable drop would be hard to ignore.

The June propylene contract rolled over from May, and PP prices have been following this move in cases in general, but some buyers are expecting to be able to push for lower levels by the end of the month.

In the face of lower prices to come, PP buyers could be realistically expected to slow down their buying, and use any stock they may have. Smaller buyers in Europe, and those in the UK in particular, are thought to have comfortable stock levels.

Converters have been building stock in recent weeks, as planned cracker outages had the potential to tighten propylene - and hence PP, but the market has remained well supplied.

Some significant price drops have been heard for June, but so far they are from high-end accounts, where homopolymer accounts could be paying  levels close to €1,300/tonne FD (free delivered) NWE (northwest Europe).

Such high levels are disappearing, but prices at the low end of the spectrum are remaining firm, for the time being at least.

Low-end spot prices are not seeing much change yet either, as imports are offered at stable pricing, giving buyers little opportunity to take advantage of lower naphtha levels.

Distribution sellers are not seeing the strong volumes currently reported from the contracted market, and they put this down to destocking against a background of lower price expectations for July.

On Thursday morning, Brent crude oil dipped below $61/bbl, according to, from a high of around $72/bbl in mid-May. Persistent weakness was expected to continue to exert pressure on naphtha.

PP monthly prices are not yet fully settled, but usually do so in the first ten days of the month.


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

Picture source: Shutterstock

Focus article by Linda Naylor