The highly volatile oil market has kept most European polypropylene traders from taking advantage of the arbitrage window from Asia, as per industry sources in Platts. Despite the rebound in Asian prices so far in March following the declines in February, a wide gap remains between CFR Far East levels of US$1417/mt on Thursday and European prices. Prices in Europe, in contrast, were on a steady ascent since the start of the year, propelled mainly by soaring feedstock costs and a pick-up in demand, reaching Eur 1320-1325/mt FD NWE Thursday.
PP imports from the Far East are mostly subject to 6% duty in Europe. This, plus freight cost of around US$100-120/mt, will translate into a landing price in Europe of around US$1612/mt, equivalent to Eur 1220/mt. At this price level, plus a mark-up of around Eur30-40/mt, imports from Asia remained an unattractive option because of the long transit time of at least four weeks. Amid volatility, if oil prices fall, it could lead European PP prices to easily drop quite dramatically and traders fear getting stuck with a very expensive cargo from Asia.
Asian PP traders are inclined to move cargoes mostly to Africa and India instead. There is a strong demand in India, where supply is expected to tighten ahead of the plant turnarounds in April. Indian producers increased domestic prices by INR 2000/mt (US$40/mt) on Thursday, the second time this month, on higher demand and the depreciation of the Indian rupee against the dollar. The currency has fallen 2.4% against the dollar since March 1 to settle at INR 50.41 on Friday. In North Africa, PP prices were also moving higher, with availability expected to be constrained by plant maintenance shutdowns in the Middle East. PP homo injection/raffia prices in the region were at US$1500-1505/mt CFR Alexandria on Wednesday, the highest since October 5, Platts data showed.
12-Mar-12 
{{comment.DateTimeStampDisplay}}
{{comment.Comments}}