European PP buyers cautious on weak February outlook

The European PP market continues to witness three-digit decreases compared to last month and some sellers even conceded to slightly larger discounts than the propylene contract drop of €120/ton to speed up their sales, according to ChemOrbis. Despite these sharp price cuts, buyers remain cautious about their purchases due to their bearish expectations for the upcoming month. Players agree that propylene contracts are likely to settle lower for February given the weak upstream markets. However, they think that the anticipated decreases may not be as sharp as those recorded this month. Spot naphtha prices gained ground towards the end of last week to hit back to the US$400/ton threshold while they are still standing below early January levels. Spot propylene prices have declined by around €50/ton compared to the beginning of the month. In Italy, a distributor reported issuing further slight discounts on their PP deals compared to the beginning of the month, bringing his total decrease amount to €120-130/ton for January. Another distributor sold locally-held South African PP €120/ton below December, but did not exclude the possibility of issuing further slight discounts in the days ahead. According to the seller, buyers are hesitant to engage in new purchases as they project further reductions for February. A compounder bought West European PP with decreases of €130/ton from December, but reported limiting his purchases due to his bearish expectations for the upcoming month. The buyer added that he received import South Korean homo-PP offers at competitive levels below the €1000/ton threshold. Another buyer, who received January PP offers €100-110/ton below last month, commented, “We heard that some suppliers are planning to reduce their output to balance out the market.” In Northwest Europe, most distributors avoided building stocks for PP given weak demand and expectations of additional decreases for February. A distributor in France concluded some January PP deals €100/ton below last month and said that buyers are limiting their purchases to a needs only basis as they expect PP prices to lose further ground next month. Another distributor in Belgium also confirmed the waiting stance on the buyers’ side and said that he hasn’t received many price inquiries this month. A German distributor reported selling West European PP with decreases from €100 to €150/ton for January. The seller commented, “We issued further discounts in some cases to boost our sales as we needed to deplete our stocks ahead of the anticipated decreases for the upcoming month.” Another distributor concluded some January PP deals with decreases of up to €120/ton from last month. For February, the seller expects PP prices to post relatively smaller decreases compared to this month. As per ChemOrbis pricing service, a packaging producer received offers for January PP contracts €100/ton below last month, but expressed his buy ideas with slightly larger discounts of €120/ton. The buyer added, “We also received spot offers, but we didn’t accept them as we think that lower prices will be available in February.”