March PP hikes meet with acceptance in Italy

Following a round of increases which were passed in the first two months of 2011, European PP suppliers have been revealing March prices with additional increases in Italy for the last couple of weeks, as per Chemorbis. Based on players’ reports so far, March price hikes are meeting with acceptance - €80-100/ton on spot PP deals and €80/ton on March gentlemen’s agreements. A seller of South African PP, which is one of the most competitive origins this month in Italy, also reported obtaining €150/ton increases over last month. Higher costs as well as tight PP supplies as a result of several shutdowns across the region forced European PP producers to raise their prices for the third month in a row. European propylene contracts have settled with an €80/ton increase on top of the previous months’ increases of €35/ton and €110/ton in February and January. Sellers still continue to face relentless increases from the upstream chain. Spot propylene prices in Europe moved higher by €15/ton since the start of this month, crude oil prices gained over US$6/barrel in one week, to cross US$105/barrel on the Nymex due to the ongoing political concerns in the Middle East. The surge in crude oil prices also pulled spot naphtha prices up by almost US$30/ton since the start of March, breaching the US$1000/ton level. Although buyers are finding it difficult to pass on price increases from February, they are paying the full propylene increase for restricted quantities. “Buyers are not purchasing more than their needs,” a trader who sold some West European materials commented this week, admitting that he is not able to sell high volumes at these new prices.
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