Europe propylene/PP spread up, demand less buoyant than expected

LONDON (ICIS)–The spread between European propylene monomer and polypropylene (PP) has improved a little in March, but demand was not as strong as expected, according to some sellers.

The month started out with strong volumes, but supply has also been strong.

“European producers producing and supplying well,” said a supplier. “Contracted volumes are okay but not what we were expecting.”

“PP demand is good,” said another producer. “We are getting 10 [€/tonne] recovery.”

Many sellers started the month with an aim of getting a rollover of prices from February, thereby gaining €23/tonne spread from the upstream propylene contract, but it soon became clear that this would not happen.

Not all PP buyers have been able to get the full €23/tonne drop of the propylene contract, but some have, they said. Much depended on the supply position of the producer in question, and also the PP grade, said sources.

PP is stronger than associated polyethylene (PE), where spot prices of some grades have plummeted, and the new swathe of production in North America is expected to keep the heat on PE.

PP spot grades have slipped in March, but there was no fight for market share as was being seen in some PE grades.

PP sellers were optimistic for the second quarter of 2018.

“There’s a turnaround schedule that typically tightens markets,” said another producer, “and strong seasonal demand is expected.”

2018 cracker turnarounds:

* according to market sources, may not be confirmed by company

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

Pictured: BP’s Gelsenkirchen facility
Source: BP