Spot PP offers creep up, European prices remain low

LONDON (ICIS)–There were signs of higher prices in the polypropylene (PP) spot market in Europe this week, with pricing in the region remaining among the lowest in the world, sources said on Friday.

With European spot PP prices so low, traders were finding it hard to source imports at former levels, as netbacks were better to other regions. New spot offers were consequently higher, and converters were faced with increases that they were not convinced they would have to pay.  

For the moment converters that did not need to buy were resisting higher prices.

“We have no supply issues at all,” said one buyer, “but we do not have so attractive prices-at the moment.”

“New offers are €1,000/tonne,” it added.

“I tried to buy spot volumes in Europe recently, and suppliers were able to provide it but with a premium to our contract conditions,” another buyer said, quoting a minimum offer for homopolymer at €1,000/tonne FD (free delivered) NWE (northwest Europe).

This was not a minimum levels for all homopolymer prices, said sources, and some material was still offered in the mid-€900s/tonne, but prices below €900/tonne were said to be no longer available.

Holidays meant that spot activity was low, but some buyers were tempted to buy in case of September hikes.

Most sources agreed it was too early to talk about September pricing, but there was evidence of some pre-buying as a precautionary measure.

In contrast to this, other sources pointed to the drop in crude oil and naphtha prices, expecting this to affect the new propylene settlement next month.

Propylene supply is tight, however, and spot prices have risen above contract this week.

A much quieter-than-usual autumn cracker turnaround season will get under way in the second half of August, lasting through October, according to market sources.

Only three crackers will be offline for scheduled maintenance during the August to October period, compared with six in the same period in 2015.  

According to ICIS data, 14% of European capacity was offline under planned conditions in September 2015. However, this year it will amount to about 3.8%.

While the outages are more modest than in 2015, some sources in the PP market expected them to maintain a snug position on monomer.

The level of uncertainty in the PP market is high, and buyers are finding it hard to gauge where September prices will land.

“One thing you can be sure of is that anything you predict will be wrong,” said another buyer.

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

Focus article by Linda Naylor

Nel Weddle contributed to this article