Market and product
Europe PP/propylene spread narrows but producer margins still strong
LONDON (ICIS)--The spread between propylene monomer and polypropylene (PP) prices in Europe has drifted down in the past three months, but margins with producers are still high, sources said on Wednesday.
The spread between monomer and polymer rose steadily from September 2014 to June 2015 but this came to a halt in July, and since then the gap has narrowed but remains well above the levels of fourth quarter 2014.
Spread between propylene contract v PP homopolymer injection gross prices
Many buyers are targeting a further reduction of this spread in October. The October propylene contract has fallen by €110/tonne, and some buyers envisage an even bigger fall in PP prices.
“They’re making enough money on monomer as well as polymer,” said one buyer, commenting on the improved margins achieved by PP producers in 2015.
Business has not yet got under way for October.
PP is used in packaging, the manufacture of household goods and also in the automotive industry.
