Upper end of Italy’s PP spot market sees resistance from buyers

For February, European PP sellers have come with initial hike targets of up to €60/ton for spot business as well as gentlemen’s agreements, as per Chemorbis. Sellers justified their large hike targets by mainly pointing to the higher propylene contracts, which were settled with a monthly increase of €35/ton on top of the January hike of €110/ton. Talk of limited PP availability was cited as another reason behind sellers’ firm stance. Despite Italy’s premium over other global markets, not many competitive import offers were heard from overseas producers as many non-European producers are said to be holding offers during the Chinese New Year holiday in expectation of improved demand from Asia when China returns from the holidays this week. This also provided extra support for European sellers’ firm stance. However, Italian converters appear hesitant to purchase more than their needs at current levels this month, with some adopting a just-in-time policy in their production process. Most converters face a difficult time convincing customers to pay incremental costs from the previous months and buyers are widely avoiding stock build-ups. The slowdown in end product markets, particularly in the packaging sector, is also playing a role in buyers’ reluctance to commit to new cargoes. Currently, the overall spot PP range for February is €50-70/ton above the January level. However, West European sellers who are mainly offering at the upper end of the spot range suffer from a lack of buying interest as their prices are found unworkably high. Looking at the cost side, the theoretical cost of producing and delivering PP based on higher spot propylene prices in Europe, but disregarding sellers’ margins is clearly supporting the low end of the spot PP range in Italy. However, this theoretical cost stands €240/ton below the very high end of the PP range. Plus, in comparison with the European PP offers to a nearby country, Turkey, the top end of Italy’s homo PP market is also carrying more than a €200/ton premium. Over the week, Italian PP buyers preferred to meet their basic requirements from sellers mainly offering Central European, South African, Indian, and Middle Eastern origins closer to the low end of the spot ranges. Offers standing at the higher end of the spot range are meeting resistance for now. Some traders and distributors at the upper end of the ranges also admit that they are yet to receive any orders so far. This situation may cause sellers offering at the top end to lose confidence, with a buyer already reporting that some sellers are ready to concede to smaller increases compared to their initial hike requests.
  More News  Post Your Comment

Previous News

Next News

{{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