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Source: ChemOrbis ChemOrbis

Further PP hikes on the scene in Italy on higher propylene

Published: 03 Feb 2010 00:32:04 PST

As an initial February propylene contract price was settled in the European market last week with an additional increase from the January contract settlement, price hikes have also emerged for homo-PP ranging between €80/ton to €120/ton for the month of February. The monthly monomer contracts were settled with a €85/ton ($118/ton with the recent parity) increase for February, surpassing the January increase of €40/ton in the region. The spot propylene market also posted additional increases following the contract settlements, with the total hike amount reaching around €125-135/ton since early January. This higher cost environment has led to a firm February outlook for PP despite fragile crude oil prices, which are still hovering below the $75/barrel threshold.

In Italy’s spot market, due to higher production costs, along with low supplies across the region, a South European producer revealed their February homo-PP sell idea €80-90/ton higher from January. The producer reported achieving €80/ton increases last month, adding that demand was not bad. Highlighting that availability is still short in the market, he said they will maintain their initial levels over the course of the month as they do not expect the upward trend to change direction towards the end of February.

Based on reports from traders, a couple of West European suppliers, who had concluded most of their January deals with similar increases, announced their February sell ideas with even larger increases of €100-120/ton. Buyers, pointing to slow performance of their end-product business, on the other hand, report that they will ask for smaller increases of €50-60/ton. There were also some traders who said they will seek relatively smaller price hikes as market conditions are still fragile, commenting that demand is not strong enough to support the full hike targets of producers.

Meanwhile, a distributor already reported paying a €100/ton increase for February gentlemen’s agreements, while a buyer stated that they agreed to pay €70/ton increases. The distributor noted that they had to pay these hikes as the market is extremely short. 

In Turkey, the PP market saw similar sized increases from a couple of producers this week, with February offers recording noticeable increases from last month for fibre, according to offers reported so far. Based on players’ reports, West European offers were revealed with large increases of €90-100/ton from the last January level. A buyer, who said they are interested in European origins this month found the current levels high. Now, the market is awaiting other regular European PP suppliers to come with their February offers.

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