Firm PP expectations arise for December in Europe

In Europe, spot PP deals for November are reported with rollovers and price hikes this week. The main driver behind this trend is ongoing tightness for both PP and its monomer propylene while early expectations across the region are calling for a firm market outlook regarding December.

Players in the region continue to report tight PP volumes, particularly for homo PP, since November started which has kept buying appetite healthy so far. Moreover, Shell’s force majeure on the olefins supply from its Dutch cracker spurred firm predictions for the last month of the year as it resulted in a jump in spot propylene prices.

Shell declared a force majeure on November 13 from its Moerdijk site that houses 450,000 tons/year of propylene production capacity given a fire that broke out on November 11. Although the exact restart date is not disclosed, Shell reportedly plans to resume operations at the cracker within the second week of December. Following the news, spot propylene prices surged by around €125/ton FD NWE basis week over week and indicated a €170/ton cumulative jump from early November. The soaring propylene market generated firm expectations despite weak energy and naphtha costs in the region.

Increases on the latest spot PP deals vary from €10/ton to €50/ton. A West European PP producer reports, “We applied price hikes of €20-30/ton on our November cargos and concluded deals in Germany. If buyers inquire for additional spot cargoes for the month, we will issue further increases of the same amounts.”

A trader of a South European PP producer sold out his November allocations with slight increases from October. “Overall PP supply is tight and our supplier has no material to provide us at the moment. Meanwhile, the seller plans to issue further increases of €70/ton on the next deliveries which would be supported by rising monomer costs and short supplies,” he stated.

A compounder in Italy purchased several cargoes from different suppliers this month. He reported that supply is limited as he was not able to obtain all the volumes he had ordered. A container producer in Belgium similarly said, “We met our needs after struggling to find PP availability and paid rollovers. We expect to see price hikes in December due to tight supply.” A houseware products maker reported buying some South Korean PP cargos to be delivered in January and February in addition to their purchases for some West European material.