NWE polypropylene prices slide on oversupply, low demand

Contract and spot prices for polypropylene in Northwest Europe extended their downward spiral this week, dragged by inventory overhang and low demand, industry sources said.

Gross contract values for November consolidated at Eur1,255-1,260/mt FD NWE for homo injection and Eur1,305-1,310/mt for copolymers, down Eur55/mt ($74/mt) from October and the lowest since April 2010, Platts data showed.

Many converters claimed to have secured a minimum reduction of Eur55/mt in their November contract prices, in line with the decrease in the November CP for feedstock propylene.

Several producers admitted to have passed on the full monomer decrease, despite initial attempts to limit the reduction to around Eur30-40/mt in order to protect thin margins.

November is shaping up to be "slower" than October and September, a producer said, adding: "People are cautious because of the economic uncertainty in Europe."

This has led to a buildup in stock, sources said, with one producer citing industry estimates showing PP inventory in Europe at around 850,000mt, way above the 750,000 mt level that the current market could absorb.

Other producers lamented that converters were not in a rush to buy, opting to purchase only the volumes that will cover their short-term requirements.

Converters who have yet to settle their November contracts believed they could still push their suppliers to accept a larger reduction of around Eur60-70.

"The market is very long. We're getting a lot of offers at the moment," a converter said, adding European producers were maximizing all channels, including distributors and traders, to move surplus products.

SPOT PRICES AT 21-MONTH LOWS

Spot prices in Europe were equally bearish, with materials heard changing hands at Eur1,040-1,080/mt FD NWE for homo injection and Eur1,100-1,150/mt FD NWE for copolymers, traders said.

"There are a lot of rumblings in the market. They're throwing numbers like crazy and yet no one's buying. People are nervous and don't want to take any risk," a trader said.

Expectations of further falls during a seasonally slow December also kept buyers non-committal, sources said.

Exports could become an attractive route, particularly with the weakening euro, they added.

European products were heard offered in Turkey at Eur1,040-1,045/mt ($1,404-1,411/mt), traders said.

European spot prices were assessed Eur30/mt lower this week at Eur1,040-1,045/mt FD NWE, the lowest since February 2010, Platts data showed.

Upstream, naphtha prices averaged at $876/mt CIF NWE so far in November, down from $882/mt in October. They closed at $883.75/mt CIF NWE on Wednesday, up from $868/mt Tuesday, but below last week's $896/mt, tracking crude.