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Will European PP outages prop up prices in April?

  • 22/03/2018 (03:34)
In Europe, many PP sellers initially announced their March offers with rollovers despite the €23/ton lower propylene contracts, drawing attention to the ongoing supply disruptions across the region. However, attempts to hold prices steady have proved unworkable as the market has been lacking support from the cost and demand side since the beginning of March.

Accordingly, buyers were able to obtain decreases of up to €20-30/ton on March PP deals. In France, a distributor said, “Spot propylene prices have not posted any major movements since late February while demand remains disappointing. Hence we conceded to giving decreases of up to €30/ton on done deals. We were initially seeking rollovers or smaller decreases of €10/ton due to our limited quotas.”

Despite limited supplies at major European suppliers, buyers could meet their needs from the market without much struggle, players noted. “This might also be stemming from buyers’ pre-buying activities,” some argued. A converter in Belgium commented, “It was hard to obtain additional quotas in the first place; however, we could receive approval afterwards.”

Players are now evaluating how the regional shutdowns will affect the future PP outlook ahead of the approaching holidays. Early April expectations indicate a stable to slightly softer trend, considering the fact that April will be a short month in terms of working days due to some festivities.

A compounder in Italy opined, “As for April, the month will be shorter and demand is usually 20% less than normal. Therefore, we expect slight decreases of €10/ton.”

However, supply restrictions are expected to remain in place amid plant shutdowns in April-May. Plus, many players concur that the next propylene contracts may settle with a rollover as spot prices have been tracking a mostly stable to slightly firmer trend since end-February.

A distributor in Germany said, “We sold our limited March allocation with small decreases while our supplier is likely to allocate less volume to us for April due to a scheduled maintenance shutdown at its plant.” Another distributor in France also reported that his supplier might have limited availability in the weeks ahead following a planned turnaround.
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