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Firming in PE lags behind PP in Europe on regular supplies

  • 12/02/2018 (14:07)
In Europe, polyolefin producers approached the market with increases surpassing the monthly monomer hikes of €20/ton for ethylene and €28/ton for propylene. According to several players, PP sellers may achieve larger increases whereas it is not the case for PE suppliers due to the lack of supply concerns.

A West European PP supplier asks for increases of up to €80/ton, citing good demand and limited supplies for some grades.

Total has recently declared force majeure on PP output from Feluy and Gonfreville while Ducor applied force majeure on PP from its Botlek plants. These have triggered supply concerns, providing an upper hand to sellers in their quest for larger hike attempts. A distributor received offers with €50/ton hikes, saying their allocations were trimmed due to a force majeure declaration.

However, buyers are not willing to pay increases exceeding the propylene’s upsurge, claiming that the recent outages are yet to cause any disruptions. A trader admitted, “Buyers are not facing any difficulties in finding material as the market is still calm. It might be stemming from pre-buying activities in the previous months. ”

In the PE market, meanwhile, suppliers are aiming to achieve increases of €20-50/ton while they are also admitting that demand will determine the size of the increases to pass on deals. The lack of any particular supply concerns in the PE market hampers sellers’ quest for margin recovery despite limited PE allocations in the import market. A reseller confirmed, “Many sellers decided to re-export their material to the Asian markets that offer better netbacks.”   

Players concur that the resistance on the PE buyers’ side is stiffer with respect to the PP market as they widely expect sellers to step back from their initial hike requests. A distributor of a West European producer in Germany, who offered his February allocations with €20/ton hikes, also acknowledged that larger increases are unjustified due to the lack of support from supply side.

The data from ChemOrbis Price Wizard also affirm that the PE market lags behind PP in terms of firming. Homo PP inj. prices both in Italy and Northwest Europe stand at their highest levels since early May 2017 on a weekly average, although PE prices are still far from reaching multi-month highs.
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