Polypropylene prices plunge in Europe to lowest level in 20 months

Polypropylene (PP) prices in Europe are under downward pressure after November propylene contract price was fully settled at €1013/ton FD NWE, down by €55/ton from October settlement of the November propylene contract price, as per ICIS. On a spot basis, net homopolymer injection PP prices are trading below €1100/ton FD NWE in some cases. The last time this level was reached was in March 2010. Monthly pricing on a gross basis is now reported at €1245/ton FD NWE where the €55/ton decrease has been applied. This price is subject to discounts. October demand was better than expected, but domestic European volumes were boosted by exports and spot lots to large buyers at keen prices. November demand is expected to be slow, in view of the current economic climate. Buyers are cautious, and both sellers and many buyers aim to end the year with low stocks. However, some buyers plan to buy in excess of their immediate to take advantage of end-of-year volume rebates. Rebates at the end of the year are linked to an agreed volume usually discussed at the beginning of the year. If agreed volumes are not reached, the discount is not applied. Production is being cut back to avoid oversupply, and one of the producers canvassed expects this to have an impact in January 2012.
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