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European PP sellers step back from initial hikes on slack demand

  • 12/04/2017 (09:02)
Some sellers in Europe approached the PP market with increases doubling April propylene hikes or even beyond that in a few cases to protect their margins. However, sluggish demand ahead of the Easter holidays and recent losses in the propylene market played a key role in confronting sellers’ hike requests.

Looking at the spread between European spot propylene and homo PP inj. prices in Italy, it has recently narrowed to around $160/ton, which is the narrowest gap since late April 2013. This stemmed from surging propylene prices, which touched almost 21 month highs in mid-March just before they plunge, according to ChemOrbis Price Wizard.



Source: ChemOrbis Prize Wizard

Now that the upstream market partially pulled its support from the PP market, buyers are not willing to accept another round of large increases as it was the case for the past couple of months, when producers boosted their margins.

In Italy, a buyer lamented, “We are upset about the new pricing policy of our regular West European supplier seeking €30/ton increases. We will skip purchasing for this month if we will not be able to pay lower prices with regards to March. Additionally, our end business is seasonally slow.”

A compounder said, “We are running our stocks down and we have no plan to buy as we are covered with import material ordered last month. We expect decreases in the next weeks as we have already seen homo PP prices re-emerged below €1200/ton.”

Shortly after, West European producers’ firm stance faltered and they started to give rollovers considering that April is a short month in terms of trading. A distributor from the Netherlands started offering with rollovers from March on weak market conditions while a buyer from Italy reported to have purchased some volumes with rollovers to €20/ton decreases compared to the initial April offers. Many regional players confirmed that PP supply is counterbalanced by slack demand.

PP prices are expected to move down further if propylene continues to exert downward pressure on the market. Moreover, sources reminded that many crackers are coming on stream by May.
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