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Tepid demand caps larger PP hikes in Europe, PE fares better

by Manolya Tufan - mtufan@chemorbis.com
  • 11/04/2019 (04:14)
In Europe, the polyolefin markets witnessed initial April hikes surpassing the monthly monomer hikes, which came at €20/ton for propylene and €30/ton for ethylene. However, players concurred that it is more probable for PE sellers to obtain hikes slightly above the monomer hike compared to PP.

PP demand lags behind PE

First and foremost, buying interest for PE is relatively better than PP, considering that some PE grades are a shade tighter or at least they are not as ample as before. Import availability, on the other hand, is still comfortable amid arriving cargoes from Turkey, the Middle East and USA.

Overall PP availability, meanwhile, is deemed comfortable despite the recent production hiccups at regional producers’ PPBC plants in particular.

Therefore, buyers mostly expect to pay no more than €20/ton hikes in line with propylene settlement, pointing to the balanced supply-demand conditions. A packager who closed deals €20/ton up said, “We will not source again this month and wait for May. Demand is slowing in our sector.”

Will producers close April order books for PE?

Although PE deals were mostly closed with increases matching the ethylene hike, a few PE suppliers have managed to achieve larger increases of €50/ton on their April deals so far.

A distributor added, “Some buyers are buying extra volumes amid expectations of further increases in May as a result of rising costs. Moreover, a few PE producers might close order books for April soon.”

Eyes locked on production hiccups

Apart from the planned turnarounds, some unplanned production outages have also occurred recently, which has yet to fuel supply concerns in the region.

Borealis declared force majeure on some grades of PP from its Schwechat plant in Austria after facing some technical issues. The producer also faced some production issues at its 300,000 tons/year of PP plant in Kallo, Belgium, according to sources.

Brazil’s Braskem has been facing feedstock related production issues at its PPBC unit in Schkopau, Germany due to the technical problems at Dow’s cracker, which feeds their downstream units.

When it comes to PE, LyondellBasell is also reported to have faced some technical issues at its LDPE plant in Aubette, France.

Players are questioning possible impacts of these unplanned outages on supplies in the days to come when the heavy cracker maintenance season is also taken into account.

To track the most updated PP production news, please see PP Production News (For members only)

To track the most updated PE production news, please see PE Production News (For members only)

Easter clouds prospects of improved fundamentals

Reduced availability in the wake of recent production losses might be counterbalanced by ebbing demand, market participants argued.

PP and PE sellers had to moderate their initial hike targets on scant activities ahead of the Easter and bank holidays at the end of the month. Buyers’ preference to avoid sourcing beyond their urgent needs also played a role in their step-back from initial hike targets. These factors are likely to delay a possible improvement in demand during the month.

A PE buyer affirmed, “We are covered until May. Demand has slightly tapered off and we do not expect a pick-up in demand ahead of the Easter holidays.”
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