Market and product

Polypropylene (PP) players in Europe are fairly relaxed in April, as most sellers have sold what they have to sell and buyers have bought what they had to buy, sources said on Thursday.

“I’ve been offered spot this week but I don’t need to buy,” said one buyer.

Spot prices are still above €1,000/tonne DDP (delivered duty paid) for homopolymer prime grades, and there has so far been no signs of weakening of the price level, as traders with product are expecting propylene, and hence PP, to remain firm into May.

The higher crude and naphtha prices seen on Thursday are expected to support earlier views of a rollover to higher price for the upcoming May propylene contract price, and a balanced stock position with producers support this.

One potential fly in the ointment, however, could be the level of stock that is building with buyers.

Fears of a repeat of 2015, when product was short, sending buyers abroad to secure volumes at prices that were higher than the local price at the time orders were placed, are also hanging over the market.

“2015 changed everything,” said another buyer. “This year we’re holding a bit more [stock].”

Buyers were also making sure they could change grades quickly if it came to it, another lesson learnt from 2015.

“If it’s [2015] taught us anything, we’ve improved our grade slates,” the buyer went on.

2015 demand for PP ran at 6%, according to several suppliers, and buyers said that part of this must be down to restocking at the end of the year after the year’s extraordinary events.

Producers remain relaxed, however.

“I can’t see any trigger to change things for the moment,” said one.

The May propylene contract was expected to settle towards the end of the month.

The current contract stands at €620/tonne, leaving the spread between propylene and PP high.