16 April, 2018
In Europe, PP sellers’ initial hike attempts for April have proved to be unworkable in the midst of weak demand and sufficient supplies. Some regional players reported that limited working days in April counterbalanced the ongoing production outages. Accordingly, April PP deals started to be concluded with mostly rollovers while the sentiment for the rest of the month appears to have weakened mainly due to the slow stance of demand. Buyers are shying away from fresh purchases as they expect to see decreases in the days ahead.
A distributor in Italy said, “We are offering with rollovers while the market is still calm. Thereby, we are negotiating with our suppliers for a small discount of €10/ton. It appears that prices are too high and the market is unable to absorb any hikes.”
A different distributor from Belgium affirmed buyers’ will to see some decreases during the month and added, “We might be more flexible on the high ends of the price ranges in return to firm bids.”
A buyer in Italy commented, “We expect prices to retreat slightly during the month as demand is weak while supply is comfortable despite some production outages across the region. Plus, the month is short due to the Easter holiday. The cold weather also took its toll on the beginning of the high season.”
In the Netherlands, meanwhile, a distributor said that he expects prices to be revised down by €30-50/ton during the month.
As for the contract market, a packager in Austria said, “We received offers with increases of €10/ton in the contract market, but we expect to pay rollovers by the end of the month given weak demand and sufficient supplies. Plus, end-buyers are quite cautious with their purchases and they are only ordering according to their needs.”
Nevertheless, there are also some players who expect prices to hover around their current levels if demand improves in response to the rising crude oil and naphtha prices. Players keep an eye on whether the recent energy gains will be reflected on propylene contracts in the next month. Although May expectations are yet to take their final shape, players agree that the future trend of PP will hinge on the state of demand.
“Demand is better than last week as players are returning to the market following the holidays. We think that prices will remain on their current levels until the end of the month while we expect to see increases of €20-30/ton in May on the back of the firming trend in Asia and scarcity of imports into Europe,” opined a reseller from Italy.