Polypropylene spot prices in Europe rise by 20% to 8 month highs

A more than 20% rise has been seen in Polypropylene (PP) net spot prices in Europe so far this year. Prices have spiked to an eight-month high, as producers close February order books and only offer new volumes at higher prices amid expectations of another increase for March propylene, as per ICIS. Homopolymer injection net spot prices are now trading at €1260-1300/ton FD NWE, from a level of €1040/ton at the end of December, representing a increase of more than 20%. PP prices for H1-February rose by at least €100/ton (US$132/ton), with some producers implementing hikes of €120/ton and sometimes more. Currently, most are either not selling at all or only selling at yet-higher levels than they did in early February. “Material is not exactly short, but it’s not long either and with everybody expecting a big hike in the March propylene contract price prices can only go up again next month,” said a trader. The uptrend has been prompted by poor cracker and polymer margins, as crude oil and naphtha prices continue to be very firm. Production has been cut at the cracker and polymer level for many weeks, as producers brought high October and November stocks under control. The final demand picture in Europe is not clear at present, and there is some fear that the hefty hikes seen recently and also expected in March will only attract more imports. Offers of PP from the Middle East are made into Europe but levels are no more attractive than current offers from western European producers, and sometimes above. Some buyers said that they were building stock in anticipation of a March increase. However, most players see a big increase in PP prices in March as inevitable, but most players move with caution as the outlook is cloudy for the second quarter of 2012.
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