Italian PP, PE markets to see support from higher monomer contracts

02-Dec-13

In Europe, monomer markets closed last week with higher December propylene and ethylene contracts, as per ChemOrbis. Players had been eyeing these settlements in order to set the tone of the PP and PE markets, which were already giving signs of firming up. Last Friday, December ethylene and propylene contracts fully settled in Europe. Both contracts rose by €30/ton for the month. The new ethylene contracts were settled at €1225/ton (US$1667/ton) while the propylene contracts were concluded at €1110/ton (US$1511/ton) on FD NWE basis. The spot ethylene market was around €25/ton softer since the beginning of November but the spot propylene market was €15/ton firmer when compared to the start of November. The increase on the contract prices saw support from higher naphtha prices in the region, which rose about US$30/ton since early November. In Italy’s PE market, overall supply levels were reported to be somewhat limited and this situation resulted in higher spot prices in the country. Earlier last week, prior to the ethylene contracts, sellers were already voicing €40-50/ton higher sell ideas for December gentlemen agreements. “Most producers completed their November business earlier than usual due to the limited supplies,” a buyer had commented. Prior to the ethylene settlement, a distributor had also said that they were already offering their December cargoes with an increase of €20-30/ton from their November levels. The distributor had further highlighted, “We are expecting hikes on ethylene contracts given the tight supply situation.” In the PP market, producers were also targeting December hikes but not as high as the increases aimed by the PE sellers. Supply issues are reported for homo-PP grades but buyers comment that the PP copolymer market does not experience such problems. Therefore, the anticipated increases are likely to be larger for homo-PP products. According to ChemOrbis, a buyer had commented prior to the monomer settlement, “Our Northwest and South European suppliers told us that they held no availability to offer and added that they were planning to seek at least €20/ton hikes for December. As a result of no availability from our regular sources, we turned to the Central East Asian suppliers to meet our needs.”