PP markets face supply tightness in Mediterranean

Players have been facing supply tightness in Mediterranean PP markets including Turkey, Italy and Egypt for the last few weeks, as per ChemOrbis. New PP offers for May already emerged higher from the Middle East in Turkey and Egypt due to limited supplies on the part of regional sources. The ongoing production issues combined with higher propylene contracts in Europe keep May expectations firm in Italy as well. In Turkey, prompt PP supplies are reported to be quite limited particularly for fibre grade which drove prices higher once again this week. Middle Eastern sources returned with modest increases for the new month with support from their limited supplies. Some players commented, "Regional sources chose to direct their quotas to other markets citing better netbacks amidst cheaper freight rates to other regions." Also, a couple of players reported limited cargos from Iran. "We are having a hard time in securing new cargoes from Iran as producers prefer to sell to China and India with better netbacks. Global factors including the rising trend in Chinese and European PP markets in the midst of the turnaround season as well as the domestic factors like insufficient availability and satisfactory demand will pull PP prices higher," said a trader. A carpet manufacturer also affirmed, "The fact that Middle Eastern and Iranian suppliers are able to sell to China more easily with better netbacks caused there to be fewer offers made to Turkey." At the same time, Turkey experienced some shipment issues for certain origins including Romanian and Indian during the past month, while a Bulgarian supplier was absent earlier last month given a maintenance that recently ended. In the local market, Petkim also raised PP prices by US$15/ton early this week which was attributed by several players to limited stocks on the part of the domestic producer. Afterwards, local PP raffia prices below the US$2000/ton threshold became increasingly scarce for promptly available cargos. In Italy, supply concerns increased amongst PP buyers and some of them reported that they are planning to make new purchases at the beginning of next month. Offers for Central European origins were quite scarce and some West and South European suppliers were said to be holding limited availability which was attributed to a feedstock shortage. "Some buyers are likely to return to the market following the holidays on May 1 due to their supply concerns," players commented. Even before new propylene contracts settled up €10/ton on Wednesday, a distributor expressed his May sell ideas with €40/ton increases for West European cargoes anticipating that propylene contracts could settle €10-20/ton above April. The seller cited limited availability as the main reason behind his hike target. Also, a packaging converter in Austria stated after the propylene settlement, "We are still negotiating with our suppliers to pay only the propylene hike while they are still seeking €20/ton increases. We noticed some delays in deliveries in April." In Egypt, the domestic PP producer EPPC' prices have not been reported in the market for over a month which reduced supplies in the country. According to local media reports, workers at EPPC started a new strike early this week. In the local market, prices continue to be supported by the limited availability with PP film availability remaining tight in the market. According to ChemOrbis, in the import market, initial Middle Eastern PP offers to Egypt were reported for May with increases from April. A distributor commented, "We were already expecting a firmer trend for May and we expect similar prices from other Middle Eastern producers.