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Will European PP, PE sellers achieve larger hikes than monomer gains for Sept?


In Europe, the sentiment in the PP and PE markets was already strong before ethylene and propylene contracts were settled with respective increases of €30/ton and €40/ton from August. Although official September offers are not widely out yet, initial offers indicate larger increases than the size of monomer hikes as sellers are aiming to recoup their squeezed margins.

A South European producer has announced increases of €50/ton for his September PE prices, saying, “We have lost margins in the past few months due to the persisting downward trend in the PE market and increasing ethylene prices.”

A West European producer is also aiming to ask for increases of €60-70/ton in their September PP offers, pointing to their expectations of good demand and need to recover margins.

Another major West European producer is planning to seek €60/ton increases in September PP offers on the back of the same reasons,

However, whether suppliers will achieve their larger hike targets or not depends on the state of supply and demand, argue some players. A source from the producer admitted, “Demand was good in August given the fact that PP prices had reached the bottom and many converters did pre-buying. The trend is upwards for September; however, the weakening USD may open the arbitrage window for imports to Europe.”

Some players also point out that buyers are mostly covered as they built safety stocks particularly from the import market in July and August amid bullish expectations for September. Therefore, they may not be willing to accept the full hike request of sellers. Others, however, say that buyers will continue to purchase additional volumes from the local market in September as they think that the upward trend may persist in October.

In terms of supply, there are no major issues for PP while it has been considered limited for LDPE and LLDPE for some time in Europe. A few players also remarked the most recent railway closure in Germany causes delivery delays from the region and this might put further pressure on prices.

According to ChemOrbis Price Index, spot PE prices in Europe stabilized just in August after 5 months of steady decreases. In the case of PP, the market fell for four straight months before recovering to some extent in the second half of July and stabilizing in August.

 

 

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