PP players in Italy voice mixed expectations for April

21-Mar-12
Italy’s local PP market moved upwards for the third consecutive month in March, as per ChemOrbis. According to players’ reports, monthly increases of €80-140/ton have passed so far this month in the spot market. For gentlemen’s agreements, apart from a buyer paying €70/ton higher prices for March, negotiations are still underway. Even though buyers are not seeing spectacular demand for their end products for now and find the current levels high, some converters are nevertheless accepting these offers for small volumes rather than running the risk of finding themselves left with no stocks. As the month wears on, expectations about the April PP outlook are surfacing. For now, sellers are apparently maintaining their firm stance pointing to low local availability and producers’ need to improve their margins as reasons. Although there is no official announcement yet, some PP sellers have made early comments that their suppliers are mulling over new increase targets for April.A source at a South European PP producer warned, “Further increases may come next month.” “Prices may rise further next month as producers are mulling over new price hikes complaining about their negative margins,” a trader offering on behalf of a Middle Eastern producer reported. A compounder told ChemOrbis, “We heard of further increases of €30/ton from a European PP supplier. We are worried about further price hikes in April as our end product customers warned us that they don’t want to pay further hikes next month.” Some players, on the other hand, expect the upward trend to lose pace claiming that local PP supply is not as tight as sellers claim it to be. A weekly drop of €10/ton in spot propylene prices is also helping PP sentiment weaken recently, with buying activities slowing this week. A reseller admitted, “Distributors’ stocks are full of unsold materials but other suppliers do not have much availability.” A distributor commented, “We heard of further price hikes in April but we don’t believe that producers will be able to pass these increases next month.” A buyer expects to see rollovers next month, hoping to take a break from the successive increases they have been paying. “We feel that prices will stabilize next month and will turn down starting from May,” the buyer commented. “Producers have already revised their initial prices down slightly this month to attract demand,” another buyer stated.
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