PP prices rise in Europe amid concerns over outlook for the year

19-Jan-10

Though Polypropylene (PP) buyers in Europe are shelling out to pay price increases in January, buying is being done on a hand-to-mouth basis before February propylene settlement, amid concerns over the outlook for the year as per ICIS. Regional differences and a wide spread of prices were reported by market sources. Southern Europe still reported delays return to markets by the smaller buyers in particular after the New Year Break. Customers are reluctant to start buying, and are interested in single trucks, with material delivery within 48 hours. Since end of December, PP prices have risen by a minimum of €50/ton (US$71/ton), with some producers still looking for an increase of €80/ton. Homopolymer injection prices were reported between €950-1020/ton FD (free delivered) NWE (northwest Europe) on a net basis in mid-January, compared with below €900/ton FD NWE in mid-December. Any new increase in the February propylene contract is expected to be passed on to the PP market. A tight supply persists in monomer due to production issues, along with cutbacks at the cracker and refinery levels for commercial reasons. Short supply of propylene has lead to PP output being curtailed, leading large buyers no option but to accept increases targeted by their regular suppliers. Some monomer sellers had mentioned price increases of as much as €90/ton for February propylene. But the weakening in upstream crude oil and naphtha prices was likely to affect the new propylene contract price in February. The PP market awaits offering from new capacities in the Middle East to Europe, but offers were slow in coming as material was destined mainly for Asia.