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Another force majeure tightens PP prices in Europe

March 19/2010

March 19 (plastemart) -- Technical issues have pushed INEOS to declare force majeure from its Grangemouth PP plant in the UK on 16 March. This has compounded an existing tight supply caused by shortage of propylene at LyondellBasells Carrington, UK, that prompted a force majeure on PP supply earlier in the week, as per ICIS. In addition to this, propylene constraints have also affected PP production.

Polypropylene (PP) availability in Europe has tightened further and buyers will be faced with more increases in April, probably in three-digits.
PP prices had increased by ?200/ton in Q1-2010, with net homopolymer injection PP prices trading around ?1,100/ton FD (free delivered) NWE (northwest Europe) mid-March. Buyers said that copolymer was more difficult to get hold of than homopolymer, as the effects of SABICs earlier production issues in Geleen in the Netherlands were still felt in the market, coupled with propylene constraints that also affected supply. The April propylene monomer contract was expected to increase, with initial offers by sellers up by ?80/ton over the current March level of ?910/ton FD NEW.
PP inventories are currently low with processors as buyers expected new plants start ups in the Middle East and Asia to provide cheaper material in 2010, but delays in start-up and earlier strong demand from China, along with cutbacks European output, have compelled European buyers to pay higher prices.

Asian PP prices had remained stable but some sources expected PP to be affected by the sharp fall seen in the polyethylene (PE) market. Homopolymer injection prices were in the region of US$1250-1300/ton CFR. Offers of re-exports from Chinese traders to Europe were currently too high to work, but trading sources saw some arbitrage possibilities if Europe continued to rise and Asian prices slipped.

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