European PP signals stabilization after 7 months of hikes
May deals were closed with rollovers to increases of around €50/ton as opposed to the initial hike requests of €100-150/ton. This was because the majority of buyers decided to limit or even skip their purchases for May amid widespread expectations of seeing a reversal in June.
Stability foreseen for June
Although a few producers even shared their intentions to apply increases amid possibly higher monomer settlement, June expectations are mostly calling for a stable trend. Participants reported that regional tightness will help prices stabilize until en-route cargoes arrive by late June or early July on the back of challenging logistics operations and delivery delays.
Lingering outages to keep prompt availability tight
Ineos lifted the force majeure on PP supplies from Grangemouth and Geel in May. ExxonMobil and Total have restarted their PP plants in France following turnarounds. However, regional tightness has yet to ease to a large extent. Players remarked that some PP plants are still under maintenance shutdowns, which will continue to keep supplies snug in June. SABIC Europe will undergo a 2-week long maintenance shutdown between May and June.
Meanwhile, LyondellBasell declared a force majeure on PP supplies from its site in Wesseling, Germany due to technical issues on May 20. The company had earlier declared a force majeure on PP grades from Ferrara, Italy.
Buyers to refrain from purchasing beyond urgent needs
Overall PP demand is expected to be supported by reopenings in Europe, while purchases may remain tied to the basic needs as buyers are reluctant to stock up at the current offer levels. Near-prime materials may also be favored over virgin PP.
“If inflated prices are here to stay in June, buyers mull over buying near-prime materials at much lower prices,” a player said.
Arrival of imports to push forward pricing lower
More imports will make their way to Europe amid record-high netbacks and lethargic demand in nearby Turkey, China as well as Covid-hit India and Southeast Asia. The intensifying pressure from aggressive import offers will most probably hinder any possible hike attempts for June, also bearing already inflated prices inside Europe in mind. There is a critical question of whether or not Europe will be able to preserve its massive premium over other major markets, which saw sharp downward corrections.
According to some, Europe may continue to be unfazed by the broader markets owing to its internal dynamics at least during the first half of June. That is to say, PP prices are likely to witness substantial drops in July and August, when summer holidays kick off. A distributor noted, “We think that prices will retreat to €1400-1500/ton on FD basis in the following months.”
Spot PP ranges were assessed stable last week at €1900-2100/ton for PPH and €1950-2150/ton for PPBC FD Italy, 60 days. In Northwest Europe, prices were assessed flat at €2000-2150/ton for PPH and €2050-2200/ton for PPBC inj. FD, 60 days.
In the import market, South Korean PPH inj. was dealt at €1580-1600/ton CIF Italy, 60 days with delivery in late July. Offers with delivery in mid-July stood at €1640-1650/ton on DDP Italy, 60 days basis.
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