Following 2-3 weeks of shutdown for summer holidays in August, Italian buyers have been gradually resuming their activities this week, as per ChemOrbis. After August PP business was mostly wrapped up with rollovers from July, the September PP outlook has started to be shaped by the monthly propylene contracts, which were settled at the end of last week. Earlier in the month, the market sentiment was relatively firmer for September especially on the sellers’ side. Not having made large purchases, many buyers were expected to return to their desks with insufficient inventories in late August/early September, which sellers were relying on in order to create a stable to firm trend for the post-holiday period. “Even if the propylene contracts settle with further decreases for September, monomer costs would still be very close to the low end of the overall homo PP range. If PP sellers cut their prices in September, they would lose all of their margins,” a distributor had speculated prior to the propylene settlements. Affected by sellers’ firm stance, there were some buyers who had even secured some cargoes before the holidays in anticipation of price hikes.
Lower costs, however, changed the sentiment over the past few weeks. Following a €37/ton decrease in the September propylene contracts, the PP market has not seen any price hike attempts for September. This week, European PP sellers are waiting to see each others pricing strategy before making their offers. Sell and buy ideas so far indicate monthly decreases of €30-40/ton. Buyers are not in a hurry to make new purchases for now and they generally feel that they will be able to obtain discounts as the month wears on. Although a theoretical cost calculation based on the new propylene contract price indicates an upward pressure on the lower end of the spot PP market as it comes to a price above the prevailing lower end offers for PP, the sentiment appears to be weak especially on the buyers’ side for the time being.