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Europe PP buyers pay more in Dec, face hikes in January

December 10/2010

(ICIS) -- Polypropylene (PP) buyers are being forced to pay more in December because of better-than-expected demand and restricted availability, with some producers beginning to warn of further hikes in January, market sources said on Thursday.

Producers aimed to cover the ?22/tonne increase in the December propylene monomer contract, a number many now considered too low given the recent rise in upstream costs. The propylene contract settled at ?960/tonne FD (free delivered) NWE (northwest Europe).

Costs had increased considerably in recent weeks. Brent crude oil was back up to $91.46/bbl on Thursday, in line with levels seen only in October 2008, and naphtha was trading at $828-832/tonne CIF (cost insurance freight) NWE.

Some PP buyers were making parallels with 2008, when it seemed that prices could only go one way, before falling spectacularly to well below the propylene contract price. Producers did not envisage such a drop, however.


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