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PP PRICES REMAIN FIRM IN EUROPE

December 7, 2021

PP prices remain firm in Europe in December, according to GC Intelligence market analysis. A combination of factors are preventing a retreat from the current highs despite better supply.

Polypropylene (PP) supply in Europe remains tight. But the situation has improved from the critical shortages experienced earlier in the year. However, prices are not falling, remaining supported by logistic disruptions, firm costs or raw materials, and lately high electricity costs.

Another key factor preventing prices from retreating is the high freight costs making imports less competitive. And the lower value of the EURO has eroded further this competitiveness.

The lack of competitive imports and other supporting factors will ensure European prices will remain at current levels. Nevertheless, as events accumulate and continue to change market dynamics, prices have diverged considerably between players.

While some buyers note spot prices for homopolymer grade below €1,600/mt, others are still above €1,800/mt. And for contracts, while some sellers are pushing for prices €450/mt above the monomer propylene prices, others are looking for as much as €600/mt.

For many buyers this unusually places contracts above spot prices. As such, many are contemplating to move away from contracts and purchase exclusively on spot. While such a move calls into question security of supply, events during the past year proved that contracts do not necessarily guarantee supply.

Meanwhile, given the many variables, the outlook remains less predicable for next year. However, it is more likely than not that a prolonged pandemic will continue to disrupts markets and prevent prices from falling substantially from the current highs in the next few months.

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