Polypropylene market in Europe hints at bearish start for 2015

17-Dec-14

The European PP market remains on a downward trend this week as trading activities have started to slow down ahead of the Christmas holidays, according to ChemOrbis. Expectations are centered on a new round of decreases for January as players project a lower propylene settlement given weak spot values. In addition, supply is sufficient while trading activities are not expected to revive until January 7 following the holidays. Spot naphtha prices are down by over US$50/ton on the week and remain below the US$500/ton threshold, weighed down by the bearish energy markets. Spot propylene prices have also dropped by over €50/ton compared to the beginning of the month. Several distributors concluded some December PP deals with decreases from €30/ton to €50/ton from November in Italy. The sellers reported that supply is comfortable, commenting that the PP market is likely to lose further ground next month given the weak upstream markets. The latest spot PP prices are standing at the lowest levels since June 2013, according to ChemOrbis Price Wizard. A German distributor conceded to discounts of €60/ton on his December PP deals and commented that supply is sufficient. In Belgium, a distributor sold West European PP €50/ton below last month. “Demand was quite weak in November so buyers are now replenishing their stocks and our December sales are good. Supply is ample,” the seller commented. Another distributor concluded some December PP deals with decreases of €30-40/ton. “We reduced our stocks this month and we expect to see further softening in December,” he commented. A compounder bought South and Central European PP €40-50/ton below last month and also reported obtaining additional discounts of €20/ton for West European cargoes compared to the beginning of the month. A converter said, “We only bought limited volumes this month with decreases of €50/ton as we expect to see a new round of reductions in January.”