PP market up from a year-low in Europe; yet hikes beyond C3 see resistance

Petrotahlil-In Europe, March PP offers were revealed with increases in line with the propylene hike of €25/ton while there are also some hike requests larger than propylene. However, these large hike attempts have met resistance from buyers and they have moved to the sidelines.

Balanced supply-demand shown as reason 

Players think that moderate demand and sufficient supply might limit sellers’ hike attempts going forward. Buyers’ initial response to hike attempts of up to €40/ton has been poor so far as they either sit on comfortable supplies or wait for their import cargoes to arrive. 

“Buyers replenished their stocks when prices were lower. Thus, March may witness a slow buying interest,” a reseller from Switzerland said.

Buyers delay purchases to H2 March

Buyers wait on the sidelines until more PP offers surface and monthly negotiations start. They postpone their purchases to the latter part of the month in anticipation of obtaining slight discounts.

A compounder, who was offered PP with €30-35/ton hikes, said, “We are covered for now and we expect smaller increases to pass on deals. Suppliers remain adamant at their levels, but demand is lower when compared to last year.”

Propylene hikes to pass on PP deals

Still, buyers are convinced that the entire monomer increase will pass on PP deals. According to them, there is no reason to support increases beyond the monthly monomer increase as the seasonal demand is yet to pick up and players’ cautious stance stemming from the slowdown of the automotive industry puts a cap on smooth trading.

One player commented, “We purchased some import material with delivery in May as prices likely to move up until June. Therefore, March deals will be closed €25/ton higher in line with propylene’s outcome.”

March hikes pull PP prices up from around a year low

Although the exact increase amount to pass on PP deals is yet to be known, the PP trend shifted upwards along with the recent hikes.

The weekly average of spot homo PP and PPBC inj. prices in Italy turned up in late February this year after they reached their lowest levels not seen since around mid-December 2017. 

Data also show that homo PP and PPBC inj. prices in Northwest Europe rebounded from a year low in the latter part of February.