PP moves up again in Italy as propylene rises

03-Feb-10

As February propylene contract price in the European market settled last week with an additional increase of €85/ton (US$118/ton) from January levels, PP price hikes seemed inevitable. As per Chemorbis, price hikes have emerged for homo-PP from €80-120/ton for February. Earlier, the monthly monomer contracts for January increased by €40/ton. The spot propylene market has seen a total increase of €125-135/ton since early January, leading to a firm February outlook for PP despite fragile crude oil prices, which are still hovering below the US$75/barrel threshold. Propped by higher production costs amid low supplies, a South European producer revealed February homo-PP sell idea €80-90/ton higher from January in Italy’s spot market. This is in addition to the €80/ton increase last month, amid reasonable demand. Since avails are expected to be restricted, producers will maintain their initial levels over the course of the month as the upward trend is not expected to change direction towards the end of February. Based on reports from traders, few West European suppliers, who had concluded most of their January deals with similar increases, announced their February sell ideas with even larger increases of €100-120/ton. Buyers, pointing to slow performance of their end-product business, on the other hand, report that they will ask for smaller increases of €50-60/ton. There were also some traders who said they will seek relatively smaller price hikes as market conditions are still fragile, commenting that demand is not strong enough to support the full hike targets of producers. Meanwhile, a distributor already reported paying a €100/ton increase for February gentlemen’s agreements, while a buyer stated that they agreed to pay €70/ton increases. The distributor noted that they had to pay these hikes as the market is extremely short. In Turkey, the PP market saw similar increases from a couple of producers this week, with February offers recording noticeable increases from last month for fibre grade. Based on players’ reports, West European offers were revealed with large increases of €90-100/ton from the last January level. A buyer, who said they are interested in European origins this month found the current levels high. Now, the market is awaiting other regular European PP suppliers to come with their February offers.