Will February PP hikes prove workable in Europe?
PP producers reveal hike attempts for 3rd month
February has been the third consecutive month that European PP offers were announced on a stable to slightly firmer note. Suppliers had also approached the market with some increases in December and January while they had to revise their offers down to rollovers in the following weeks.
In January, initial hike attempts had mostly failed to be achieved and PP prices on FD NWE/Italy basis had returned to their lowest levels not seen since 2016, according to the weekly average data from ChemOrbis Price Index.
Players are now questioning whether or not sellers will be able to achieve their hike attempts for February as the market has not changed much structurally from January.
A distributor of a West European producer said, “We are offering PP with increases of €20/ton. Still, deals may be closed with mainly rollovers or small hikes of €10/ton due to the lack of improvement in demand.”
Buyers find hikes unjustified
Buyers are not in a hurry to purchase, expecting sellers to revise their initial offers down later in the month in order to entice sales. They concurred that the market is not likely to absorb any increases due to the stable monomer contracts and they expect to obtain rollovers on PP deals later in the month.
Several converters commented, “A similar scene was observed back in December and January, when sellers stepped back from their initial hike attempts.”
Virus-hit China dims outlook for upstream markets
Players reported that the gloomy demand outlook in China amid coronavirus outbreak weigh on global markets, with crude oil futures hitting more than a year low in early February. OPEC+ coalition have yet to reach a consensus in terms of deeper output cuts to rebalance oil markets.
Barring a demand revival in China, this is likely to keep commodity markets rattled throughout the Q1.
In Europe, reflections of these developments are awaited to be seen in the medium term. This is because the lack of buying appetite in China may lead to shift in import flows, market sources argued.
Downstream buyers are also cautious amid softer spot naphtha and propylene prices. Spot propylene prices took a break from six-week long firming trend and reported at €815/ton FD NWE, according to ChemOrbis Price Wizard. Data also reveal spot naphtha prices in Europe hit their lowest levels since September 2019 last week.
More free plastics newsPlastic resin (PP, LDPE, LLDPE ,HDPE, PVC, GPS; HIPS, PET, ABS) prices, polymer market trends, and more...
- Turkey’s PP, PE markets evaluate possible impact of border closure with Iran
- Asia’s firm PVC sentiment shows signs of faltering amid competitive Chinese offers
- Recovering downstream activity supports sentiment for PET bottle in China
- Activity pick-up sends Asian spot C3 market into recovery mode
- Total polymer imports to EU28 hit record high in 2019
- March PE expectations in Turkey weighed by new capacities, cooling demand
- PP prices hit 4-year low in China as demand remains minimal
- Taiwanese major’s March PVC offers to Asia up despite virus fears
- Virus-impacted demand inflicts toll on Vietnam's PE market
- HDPE fails to track firmer trend of LD, LLDPE in Europe