Higher monomer contracts lend support to PP, PVC, PE prices in Italy

The year 2012 has so far seen strong conditions in Europe’s upstream markets which continue to apply upward cost pressure on Italy’s polymer markets regardless of the ongoing slowness in end product businesses, as per ChemOrbis. After crude oil prices on the NYMEX moved close to the US$110/bbl at the end of last week, spot monomer prices for ethylene and propylene gained strength. This is the first time that oil prices reached this threshold since May 3, 2011. These conditions, along with the production issues at European cracker operators, have led the March propylene and ethylene contracts to settle with large price hikes for the third month in a row. The March contracts for ethylene and propylene werefully settled in Europe this week, posting monthly increases of €90/ton for propylene and €86/ton for ethylene, with the total hike amount since the start of this year reaching €200/ton and €225/ton. Although downstream PP, PVC and PE producers are yet to officially reveal their initial March offers to Italy, buy and sell ideas clearly indicate a renewed upward rally for March, in line with players’ expectations. “After selling out our February allocations, we are waiting to see the new pricing strategy of our Central European supplier for now. We are planning to raise our spot PP prices for this particular origin by €90-100/ton in March as our margins were not healthy over the month of February,” a distributor told ChemOrbis. The sentiment has been firm on the buyers’ side too, with several PP and PE buyers already placing higher bids even before the new monomer settlements. “Our PP and PE suppliers are talking about strong price hikes for another month. We are ready to pay increases of €70/ton for West European PP and €100/ton for West European HDPE over February,” a buyer had stated this week right before the monomer contract settlements. “We have sufficient stocks for now. Considering weak end product demand and the expected price hikes on PP, we decided to purchase very small volumes in March. PP producers are claiming to have tight supply but this might also be a strategy to push the market level up. We are informed by a distributor that they will come with €100/ton higher prices even for non-European origins next month. Assuming that demand will not change much, however, we feel that sellers will be able to pass no more than €80/ton increases in March,” a PP converter producing textile machine parts had also reported. “After a €86/ton increase in the March ethylene contracts, I expect to see €50/ton higher PVC prices next month. Apart from higher costs, supply is also supportive as I don’t expect to see much availability from European suppliers in March,” as per a PVC converter who claimed that a major West European PVC producer will not be able to deliver any materials before the middle of March due to an ongoing production issue at their plant. “We are yet to announce our gross market prices for March but we are planning to cover the ethylene contract price increase. Thereby, we will be able to recoup our lost margins from the last two months of 2011,” as per a source at another West European PVC producer.
  More News  Post Your Comment
{{comment.Name}} made a post.




There are no comments to display. Be the first one to comment!


Name Required.


Email Id Required.

Email Id Not Valid.


Mobile Required.

Email ID and Mobile Number are kept private and will not be shown publicly.

Message Required.

Click to Change image  Refresh Captcha