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Bullish expectations for Jan dominate Europe’s PP, PE markets

  • 13/12/2016 (04:08)
PE and PP players in Europe have started to voice bullish views for January amidst the stronger energy and feedstock costs in the region which also result in higher expectations for the monthly monomer contracts.

Following OPEC and non-OPEC countries’ agreement to cut oil production, Brent oil futures closed near the $55/barrel threshold at around $54.33/barrel on December 9. In addition, spot propylene costs on FD NWE basis have rebounded last week in line with the stronger energy markets, according to weekly average levels on ChemOrbis Price Wizard. Although higher crude oil prices have not reflected on ethylene costs yet, PE players believe that the rising energy costs will eventually have an impact on the ethylene market.

Some European sellers reported that they have tried to hold their prices stable or keep decrease amounts in check by giving smaller discounts to recover their margins, although some buyers managed to obtain full monomer discounts in a few cases.

A distributor reported that he is offering €20/ton decreases for December compared to November as they were standing on the high ends of the overall market range. He also added that demand has improved recently as many converters have started to secure materials because of the bullish talks for January.

A source from a West European producer reported that demand looks a bit better than November probably because of the bullish expectations for January.

A trader operating in the Netherlands said that they have concluded deals at stable to slightly softer levels from November and some buyers are already ordering materials for January deliveries. “We asked for more material from the US, but we could not get much availability,” added the trader.

A plastic end manufacturer in Italy reported they heard about possible increases for January and he expects to see increases of €30-50/ton next month, adding that he ordered some trucks with delivery in January.

“Our supplier has very short supply due to the force majeure from their plant in France. For this reason, we are offering rollover for a limited allocation. We are sure that prices will post increases in January,” said an agent offering on behalf of another West European producer. The producer declared a force majeure on its Lillebonne plant in mid-July and it is not expected to be lifted until the end of December.
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