Europe PP sellers put price pressure on February buyers

08 February 2018 12:38 Source:ICIS News

Trader talks animatedly on phoneLONDON (ICIS)--Polypropylene (PP) sellers in Europe are exerting strong pressure on their buyers in February, demanding more than the €28/tonne increase of the monthly propylene contract price, sources said on Thursday.

Two cases of PP force majeure – one from Total Petrochemicals and one from Ducor- were having a patchy impact on the market, as some buyers were completely unaffected by them while others were having their deliveries cut by half.

“We get what we need on spot,” said one of the buyers affected.

Some saw current high offers as sellers taking advantage of the situation.

“I can still get more [material] if I want,” said another buyer.

Buyers were attempting to resist anything more than plus €30/tonne, and some said they had settled all deals so far at this level, but outstanding ones were taking longer as sellers were insisting on more.

“There is no panic in the market,” said a large PP producer, “but our sales are very strong, and our customers are paying significantly more than the monomer increase.”

“Middle Eastern sellers are tightening up,” proffered a third buyer. “Asia is taking good volumes.”

Production in the Middle East could also be cut because of planned turnarounds, suggested the producer.

“This is the typical maintenance season,” it said.

Some buyers admitted February was hard.

“I’ve had ridiculous offers from some sellers,” said another buyer, “and some are telling me they will be tight later in the year because of planned maintenances.”

One of the other buyers likened planned maintenance outages to Christmas, however, in that they are always planned, and as such should come as no surprise.

Despite the fact that conversations were taking place in early February, there was a lot of speculation on March, and where pricing could land then. Purchases in February clearly depended on whether perceived tightness would continue.

Crude was slipping again on Thursday, and at noon Brent crude had slipped below $65/bbl. This was leading to a further slip in naphtha pricing, which was now well below its level when the February propylene contract settled.

“If crude is still like this on the 25th February, then we will see,” said a producer.

PP discussions for February are continuing.

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

Picture source: Monkey Business Images/REX/Shutterstock

Focus article by Linda Naylor

By Linda Naylor