VINACHEM

LONDON (ICIS)--European polypropylene (PP) buyers are still paying record-high prices as relief from a relentless round of price increases fails to materialise, sources said on Tuesday.

Net homopolymer injection prices are currently trading on either side of €1,400/tonne ($2,000/tonne) FD (free delivered) NWE (northwest Europe), recording an almost constant price rise from a low of €600/tonne at the end of 2008.

The expected flood of imports from new production in the Middle East has still not arrived, and sources do not expect this situation to change in the short term.

“It’s a European game,” said one distributor, referring to the current market, which is dominated by European producers. “There is not much coming from the Middle East, and I can’t see things changing for a while, particularity with crude at $120/bbl.”

Rabigh Refining and Petrochemical (Petro Rabigh) is planning to shut its 700,000 tonne/year PP plant at Rabigh, Saudi Arabia, at the end of April for approximately two months of maintenance.

Egypt's Oriental Petrochemical Co (OPC) is running its 160,000 tonne/year PP unit at about 80% because of a lack of propylene supply from Libya.

Pricing in Europe for April PP has been mixed, with producers taking a different approach to the market depending mainly on their stock position, but there has been no hint of a price reduction from European suppliers.

“I have been able to buy my PP at an increase of €15/tonne from all my suppliers this month,” said a medium-sized buyer.

Another buyer said: “Product availability has certainly eased. I had difficulty getting copolymer earlier this year but it’s no problem now. I’ve paid an increase of €10/tonne maximum for April. One of my suppliers said that they wouldn’t deliver at less than plus €25/tonne, so I simply haven’t bought from them.”

The market is now waiting for the settlement of the May propylene contract price, which is expected to give some direction to the PP market. The April contract rose by €25/tonne from March to €1,210/tonne FD NWE.

“I expect a small decrease in May propylene,” said a major PP producer, in which case buyers would push for a similar drop in PP prices.

But not all producers expect a decrease in the propylene contract in spite of easing availability, as crude and naphtha prices remain strong. The May contract is expected to settle imminently.

PP is used in the manufacture of household goods and extensively in the packaging and automotive sectors.