European PE, PP sellers reluctant to reflect monomer decreases

Towards the end of the week, though November ethylene and propylene contracts settled with notable decreases of €90/ton from October, some sellers are reluctant to reflect monomer reductions to their PP and PE prices at the beginning of the month, as per ChemOrbis. A West European producer started giving initial November PP and PE offers with rollovers from last month. A source from the producer reported, “Despite the lower monomer settlements, we kept our prices stable in order to preserve our margins. We have already received some orders for November while our supply is short for PE.” Another West European producer settled their October gentlemen’s agreements with rollovers for PP. Following the monomer settlements, the producer expressed their November PP sell ideas with decreases of €70/ton from last month. A distributor in Italy started giving stable November offers for PP and PE in line with his West European supplier’s pricing strategy and stated that his supply is short for HDPE. Despite leaving his prices unchanged at the beginning of the month, the seller added, “We heard sell ideas from other regional producers with decreases from €50/ton to €70-80/ton due to the lower monomer settlements. Therefore, we think that our regular supplier may concede to reductions of up to €60/ton later in the month.” In Germany, an agent of a different West European producer expressed his November sell ideas with decreases of €50-60/ton for both PP and PE. Another distributor in Belgium also voiced softer expectations, commenting, “We are giving stable PP offers for now in accordance with our supplier’s guidelines. However, we think that the current prices will be subject to a correction in the upcoming days since we have already heard discounts of €40/ton from other suppliers.” In spite of some sellers’ efforts to maintain their prices, converters started to voice lower buy ideas for PP. A converter in Italy reported, “Even though we are yet to receive official offers for November, we expect to obtain discounts of at least €50/ton on our PP deals. We are not rushing to make new purchases as we have sufficient stocks and our end product demand was weak in October.” Another converter in France expressed his November buy ideas with decreases of €60-70/ton for West European PP considering the lower monomer settlements. In the upstream markets, spot ethylene prices on an FD NWE basis softened by €10/ton over the past week while propylene prices declined by €45/ton to draw near the €1000/ton threshold following the monomer settlements. However, it is yet to be seen whether feedstock costs will change direction in the upcoming days given the recent production issues in Europe. According to ChemOrbis, Spain’s Repsol has declared force majeure on the ethylene output from their Tarragona steam cracker, according to market sources. The Tarragona cracker, which has an ethylene capacity of around 700,000 tpa, was previously shut due to technical issues. France’s Total Petrochemicals shut their NC3 cracker in Antwerp, Belgium towards the end of October without citing a specific restart date. The cracker has a capacity to produce 580,000 tpa of ethylene.
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