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European PP players foresee stability for Oct despite higher propylene

by Manolya Tufan - mtufan@chemorbis.com
  • 04/10/2021 (03:11)
Having wrapped up their September PP business on a stable to softer note, players across Europe have turned their focus to the new monomer settlement, which settled higher on October 1. However, expectations mostly centered on a stable trend amid improving supplies and patchy demand.

Producers may approach the market with hike attempts in the first place, citing the €25/ton higher propylene settlement and supply constraints for some copolymer grades. There remains the question of whether or not increases will be absorbed as European PP prices are already inflated.

PP still stands at record highs

September deals were closed with rollovers to decreases of around €40/ton, which pushed PPH inj. prices back to their late March levels both in Italy and Northwest Europe.

PPH and PPBC inj. markets in Italy were down by around 8% after coming off their peaks in May, according to the weekly average data on ChemOrbis Price Index. PP markets in Northwest Europe were down by around 3-4% during the same period.

Data reveal that spot PP markets in both markets still stand at an all-time high.

FD – Italy – Northwest Europe – PPH – PPBC

Despite firm monomer expectations, participants mostly excluded the possibility of seeing hikes on PP deals. Expectations mostly centered on a stable trend, considering a potential resistance to hike requests. Some sources even anticipated a stable to softer trend until the end of the year, citing all-time high levels denting buyers’ appetite for purchases beyond their needs.

Demand lags behind expectations

September demand lagged behind expectations as buyers preferred to run down their stocks. Overall PP demand has been patchy as some sectors outperform others.

Activities in the building and packaging sectors remained vivid, while the compound industry-except for the automotive sector- also performed well. However, players reported a slowdown for household items compared to August.

Demand for certain food-packaging applications is expected to slow down in October on top of the already sluggish automotive sector, where PP is the most frequently used plastic.

Logistics hurdles crimp import flow

Global logistics crisis deepened on the back of exacerbating backlogs at ports amid container shortage, which sent freight rates soaring across the board. Imports to the bloc will show a reduction as few sellers engaged in distant cargoes to avoid risks.

Uncompetitive prices also put players off from purchasing import cargoes.

However, this has not sparked concerns among players as overall availability across the region improved and the prevailing supply levels are expected to be sufficient to meet demand.
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