Europe PP prices still too low to attract imports in spite of recent hikes

LONDON (ICIS)–European polypropylene (PP) prices are still too low in global terms to attract imports, in spite of recent hikes in Europe and some slowing in Asia, according to ICIS data on Monday.

European PP spot prices have risen sharply, and very little homopolymer PP was available below €1,200/tonne FD (free delivered) NWE (northwest Europe), said sources. New offers were too high to work.

“Middle Eastern PP is available, but the price to my warehouse would be above 1,400 {€/tonne],” said one potential buyer.

“Korean offers are at the equivalent of 1,300 [€/tonne],” said another.

PP supply in Europe at present is on the tight side, exacerbated by tight propylene supply that is expected to remain so for the coming weeks, as planned cracker outages have curtailed supply.

Many sources expect the situation to change in the middle of the year, however, once outages are over, and see bringing PP over to Europe at high prices as risky.

Asian PP prices have been falling, and China’s import prices for PP may continue to weaken in the near term, dragged down by losses in the domestic market, according to sources.

Even so, the gap between Asian cost and freight (CFR) prices and European PP spot prices, once costs and a 6.5% duty has been stripped off the delivered price, leaves little room for manoeuvre for potential buyers (see graph below).

One player said a gap of around $250/tonne between delivered European prices and Asian levels would have to exist for arbitrage opportunities to emerge.

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

Image at top of story: Polypropylene (PP), sourced from SIBUR