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European PP sellers aim for larger hikes than propylene

  • 02/02/2017 (10:23)
In Europe, two West European producers were reported to be in search of larger hikes than propylene contract hikes for February due to the expectations of a revival in demand, supply tightness and higher feedstock costs. February propylene contracts were fully settled up €45/ton from January.

A German distributor reported, “Our West European supplier was already talking about hike intentions outpacing propylene hikes ahead of the monomer settlements. We are planning to reveal February prices with €70/ton increases in the following days in line with the expectations for better demand.”

Prior to the monomer settlements, an agent of a different West European producer in Belgium stated, “For February, we expect €40-50/ton increases on propylene contracts. We were informed that our supplier plans to seek increases €20-30/ton higher than propylene contracts. Import volumes into Europe have been choked off with a closed arbitrage window to Europe and uncompetitive prices.”

A distributor from the Netherlands reported that he is planning to apply larger increases than €45/ton, citing that supply is getting shorter and producers are expected to build stocks ahead of the planned cracker and plant shutdowns. “Furthermore, demand was good in January and it is expected to be rather good in February as well,” added the seller.

A manufacturer in Italy reported that their regular West European supplier’s availability was low for January and they claimed to have reduced stock levels for February as well. The buyer reported, “Many European producers have closed their monthly order books towards the end of the month. Our regular supplier was already mulling over applying €30/ton larger hikes than monomer hikes no matter to what extent the propylene contracts would increase ahead of the settlements.”

PP demand is expected to improve not only because players will need to build stocks ahead of the awaited maintenance season in the region but also because some PS converters are mulling over switching to PP for their applications due to the massive increases on PS. A distributor from Belgium reported, “Some of our customers might prefer to consume PP instead of PS as market players expect another round of three digit increases for February, which will be the third consecutive month of massive hikes.”
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