December opens with mainly stable PP prices in Italy

07-Dec-11

After three consecutive months of decreases, local PP market in Italy has started to stabilize in December, with many European suppliers holding onto their prices this month, as per ChemOrbis. Complaining about their narrowing margins amidst comfortable supply versus unhealthy demand, many producers had reduced their production rates over the month of November.“The December propylene contract price posted only a small decrease. Although buying interest is low, we will try to maintain our current prices,” a distributor, who started to offer his new shipment West European PP cargoes with rollovers, reported. “We expect prices to remain stable this month as the current market level is already low,” another distributor commented. “Several PP producers are said to be mulling over further run rate cuts in order to stop the decreasing trend and to cover their lost margins,” a reseller also noted. Buyers, on the other hand, are confident that they will be able to obtain small discounts on done deals towards the end of the month, with one buyer already receiving €20/ton decreases for various origins. As the prolonged holidays draw nearer in Europe, trading activity has slowed down noticeably since buyers are not keen to make purchases beyond their needs ahead of the year-end book closures. Plus, almost all converters are complaining about the financial difficulties and their unsatisfactory orders from their end-product customers due to the low season. “Because of the current economic and financial climate in Italy, banks are reluctant to give loans and interest rates are very high, which is affecting our business,” a compounder commented. “End product demand is slow. We are not running 30% of our machinery. We are planning to keep our operating rates low this month because of weak demand from our customers. We will purchase very limited volumes of prime PP this month,” a converter producing textile machine parts also said. A West European PP producer officially announced their initial prices for December gentlemen’s agreements but hinted that they are open to negotiate on their prices. “We are aware that the PP demand is slow. Plus, the lower propylene contracts will support buyers. We feel that will have to concede to €10-20/ton decreases on done deals at the end of the month but we will come with higher prices in January depending on the feedstock movements,” a company source commented.