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Italy’s spot PP markets ease off on ebbing demand; NWE yet to follow

by Manolya Tufan - mtufan@chemorbis.com
  • 13/12/2021 (02:49)
In Italy, spot PP markets edged lower following cost-driven increases in November. PP buyers started to receive December offers with rollovers to slight decreases as sellers yielded to waning demand towards the year-end as well as buying resistance. Initial offers in West Europe have mostly followed stable propylene settlement so far, while the pressure mounts given growing supplies.

Activities thinner on inflated levels, automotive shutdowns

Having peaked in November, PP prices have slightly levelled off in Italy. Overall PP markets across the bloc stand at an all-time high, which caused a mounting resistance among buyers.

FD – Italy – PPH –PPBC

Apart from hand-to-mouth purchases amid inflated levels and the year-end lull, automotive shutdowns have had a crippling effect on demand.

Sellers concede to special deals to deplete excess stocks

This led to growing supplies as market sources continued to report displaced volumes after auto makers halted their activities as a result of a global chip shortage and a lack of other components.

PP prices in West Europe have been mostly reported stable, disregarding some special deals being closed well below the current ranges. Distributors of West European producers were seen conceding to much lower prices in an attempt to get rid of the excess stocks that were originally intended for auto makers.

In West Europe, tentative deals as low as €1600-1700/ton for PPH and €1700-1800/ton for PPBC inj. were reported on local terms. Still, these prices were not included in the index as they are expected to disappear once excess supplies are digested.

Imports also soften

After rising steadily in the past few months amid logistics bottlenecks, non-European origins also witnessed softening on the back of weak global markets and slightly lower freight rates. Nevertheless, shipping costs from Asia are still elevated and long-lead times keep imports away despite attractive netbacks in Europe.

As for imports, South Korean PPBC inj. offers saw some drops from the previous months at €1750-1800/ton CIF Italy, 60 days, with delivery in February. US PPH inj. was offered at €1850/ton DDP Italy, 60 days, with delivery in January.

Meanwhile, locally-held offers for non-European origins are now offering a more competitive edge compared to the regional suppliers’ price levels. South Korean and Chinese PPBC inj. were dealt within the range of €1880-1950/ton FD Italy, 60 days. A Mid-Eastern PPH inj. offer stood at €1700/ton with the same terms. In West Europe, South Korean PPBC inj. was dealt at €1950-2000/ton FD, 60 days.

Q1 outlook not that rosy too

With PP prices still standing at an all-time high, it has become clear to many that regional markets have no further room to rise. Weakness in other major markets may have a spillover impact in Europe, according to some players. Meanwhile, oversupply concerns in China amid a slew of start-ups will make its presence felt more profoundly from 2022.

Price escalation throughout 2021 has had a ripple effect on resin consumption across the board. Although still-elevated transportation costs and energy hikes may prevent prices from dipping to pre-pandemic lows in the short-run, mounting resistance against overheated prices will weigh on European markets in the first quarter of 2022.
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