Early July expectations emerge softer in Europe’s PP market
PP fares better than PE
Needless to say, PP deals in the contract market are awaited to be closed at a rollover from May.
However, some sellers have decided to offer discounts of only €10/ton to speed up their sales whereas PE decreases reached €30-40/ton in the spot market. This is because PP supplies are relatively more balanced with demand while the PE market is now well-supplied in the wake of fading demand and returning capacities as well as awaited imports.
Buyers in no rush to purchase on weak end markets
Although PP demand is stronger than it is for PE, economic concerns have a knock-on effect on end businesses. Buyers are in no rush to purchase as they are sure that they will be able to obtain small discounts as the month wears on. They are either limiting their purchases to the bare minimum or postponing them to the latter part of the month.
Lower costs, approaching summer weaken July expectations
Early July expectations mostly concentrate on a softer outlook mainly due to lower energy markets. Buyers point to the lower naphtha costs to justify their expectations.
According to ChemOrbis Price Wizard, spot naphtha prices on CIF NWE basis plunged by more than 21% on a weekly average since late April, when they hit around 6-month high. This is widely expected to find reflection on the next monomer settlements despite regional cracker turnarounds.
Spot propylene prices have already responded to the upstream losses and have turned down from nearly 7-month high as of last week, according to ChemOrbis data. Buyers commented, “Lower energy markets might pull prices down in July and we are not willing to buy when prices are on a downtrend.”
Apart from that, demand is not likely to rebound over the near to medium term ahead of the summer season. Unpromising demand particularly from the automotive sector, which has been the case so far this year, also dampens recovery projections.
More free plastics newsPlastic resin (PP, LDPE, LLDPE ,HDPE, PVC, GPS; HIPS, PET, ABS) prices, polymer market trends, and more...
- Indian PVC players expect bullish trend to taper off for August
- Local PP, PE offers for July track global uptrend in Saudi Arabia
- Initial ABS prices for July see larger increases than PS in Europe
- Supply constraints spark stronger PE trend than PP in global markets
- ABS, PS uptrend falters in China after H1 2020 ends at multi-month highs
- Stats: China’s total PP imports spike in May; Vietnam and India’s rising shares shine out
- Tight supply drives HDPE, LLDPE gains in Southeast Asia
- European PE markets set for 2nd bullish month on rising costs
- Turkey’s PP and PE markets propelled to a firm start to H2 despite vulnerable conditions
- Asian PVC sees V-shaped recovery in Q2, what will Q3 bring?