Polypropylene buyers in Europe paying up to €130/tonne more in March, warned of further increases in April; homopolymer injection prices now at €1,350-€1,400/tonne free delivered to Northwest Europe

Philip Goldsmith

LOS ANGELES , March 21, 2012 (Industry Intelligence) –

Polypropylene (PP) prices in Europe have increased by as much as €130 (US$171) per tonne this month and appear to be heading for further hikes in April, according to market sources, reported ICIS news on March 20.

Currently, homopolymer injection prices are at about €1,350-€1,400/tonne free delivered (FD) to Northwest Europe (NWE), up from slightly more than €1,000/tonne FD NWE in December, according to the Surrey, England-based chemical news service.

The PP price hikes, which reflect the increased cost of propylene in March contracts, began in early March with some buyers able to get a €90/tonne increase. But those levels were from a limited number of suppliers and have not been available for two weeks.

Currently, increases of €100-€110/tonne are being discussed for March contracts that have not yet been settled, ICIS news reported.

However, late accounts were proposing PP increases as high as €130/tonne. “Our cut-off point is plus €130/tonne, and no less,” said one PP producer that reported good underlying demand.

However, many buyers believe that European PP prices won’t go any higher because that would attract more imported volumes, plus the ongoing weakness in Europe’s economy, reported ICIS news.

This year’s PP pricing cycle could be a repeat of 2011, when prices fell in the second half before rebounding in January 2012.

However, some market observers thought that scenario was unlikely because producer inventories are low and crude oil and naphtha prices are high this year.

One producer noted that “the current market situation has to do more with production issues.” Propylene has been in short supply, leading to some outages, ICIS news reported.

If propylene monomer contract prices increase again in April, there will be further pressure on PP prices next month. “We will for sure not give away any margin,” said one producer about the possibility of further price hikes in April.

However, one large PP buyer said it was becoming “increasingly difficult to pass on these increases,” and a major producer noted that converters need “time to recover” or they would go bankrupt, reported ICIS news.

The primary source of this article is ICIS news, Surrey, England, on March 20, 2012.
 

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