Focus article by Linda Naylor
LONDON (ICIS)--European August polypropylene (PP) pricing discussions are getting under way and settling in some cases, sources said on Thursday.
A rollover seemed to be the consensus for monthly pricing talks so far.
“We are doing rollover until 20 August,” said one producer. “Then we will be looking for 20 euros [/tonne up].”
“We are targeting a rollover,” said another, with a proviso that low-end levels could be under some pressure to pay more.
“I bought large volumes these past 10 days,” said a buyer. “The price was in line with July.”
While pricing is rolling over, players are also keeping an eye on markets elsewhere, and also on the replacement value of stock where imports are concerned.
Asian PP prices have been moving up, so many sellers are no longer willing to sell into Europe.
“My Korean [PP] suppliers are on order stop,” said a trader.
On the other hand, there was still material available in the mid-€1,000s/tonne FD (free delivered) NWE (northwest Europe) directly to end users from some import sources, arriving in August.
Most PP business is expected to be done quickly, as buyers go off on holiday and make provision for their return.
The general view is that there is no shortage of product, but also that if prices move, it will be in an upward direction rather than the opposite.
On Thursday naphtha was assessed at $466-468/tonne CIF (cost insurance freight) NWE, and Brent crude was now moving above $50/bbl.
These upstream movements could mean an upturn in the next propylene contract, and propylene supply was also being tightened on production issues in Europe.
Under these circumstances, several PP buyers are thought to be making precautionary purchases to avoid a potential upward move next month, said sources.
PP is used in packaging, the manufacture of household goods and also in the automotive industry.
Image: Polypropylene bottle tops. Source: Mood Board/REX/Shutterstock