Europe PP two-tier market as tighter supply props up spot prices over contracts

Author: Linda Naylor

2020/11/20

LONDON (ICIS)--A two-tier market is emerging in European polypropylene (PP) as spot prices rise while November's contract business had already been settled at a rollover.

Some PP producers are pushing for higher contracted prices, but it is the sport market that is seeing the most upward pressure as supply of some grades tightens.

Tightening is down to some closures – planned and unplanned – but also some strong exporting thanks to European prices remaining low in global terms.

Asian demand has been very strong, and Latin America has also been providing good outlets for European PP.

Turkish demand has also been good, with less material from Saudi Arabia.

PP demand in Europe remains very much application driven.

Automotive continues to be strong after a standstill earlier this year, during the first wave of the pandemic, but most sources question how long this can last.

Caps and closures, non-wovens for personal protective equipment, and essential food packaging are all good, but demand for non-essential packaging in the biaxially-oriented polypropylene (BOPP) sector is slow, and sometimes affected by the move to paper, away from plastic.

PP availability also remains very much dependant on supplier, as some have been exporting more than others.

One of the larger exporters said European PP volumes could possibly reach those of 2019 by the end of the year, something which seemed impossible earlier in 2020.

By Friday, several PP sellers were closing order books.

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

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