PP offers rise in Italy for June cargoes

Players in the Italian market reported yesterday that offers for June cargoes have risen following the bank holiday on Monday, as per ChemOrbis. Though the European propylene contracts settled with increases of €10/ton, offers on PP are up €20/ton this week. The main incentive behind the larger increase being sought on PP relative to the increase in the propylene contract price is tight supplies. Some producers claim to have low stocks while the European region has seen some plant shutdowns and rather limited supplies over the past month. As for gentlemen’s agreements, a source at one West European producer commented, “We have officially announced our June list price with an increase of €60/ton. In the spot market, buyers and distributors confirm that producers are generally seeking €20/ton increases. A distributor said, “We raised our June prices by €20/ton. Our stocks are rather low and our supplier has not yet confirmed all of the volume that we have requested for this month.” Another distributor said, “We are seeking €20/ton hikes this month in line with our supplier’s guidelines.” A buyer said, “Our regular Northwest European supplier has asked for €20/ton increases, but we consider the current price too high. We prefer to wait for now and collect offers from other suppliers because we think we’ll be able to find a lower price.” Meanwhile, buyers reported receiving Middle Eastern offers that were attractive relative to the local level for European origins. A buyer said, “We have not received offers yet from our regular European suppliers so we bought some import cargoes of Middle Eastern origin. The prices were slightly below the local level and we plan to negotiate with our European suppliers to pay only the increase in the propylene contract.” A food packaging maker said, “European supply is really tight and offers have come with increases. However, we received an offer for Middle Eastern PP raffia on CIF basis that would be near the low end of the local range after accounting for all applicable costs.” According to ChemOrbis, buyers report that they are not in a hurry this month to purchase and hope to keep the price increases on PP deals limited to the increase in the propylene contracts. Some foresee a softer trend in July and prefer to wait a bit to purchase. Some had hoped that supply tightness would loosen due to plants returning from maintenance, however, a West European producer reportedly declared force majeure on the PP output from their 270,000 tpa PP plant in France, plus another West European producer will shut their PP plants in Belgium for six weeks of maintenance. The three units have a combined capacity of 900,000 tons/year and will be taken offline in turns.