<h2><img style="width: 223px; float: right; height: 150px;" src="http://www.icis.com/assets/getasset.aspx?ItemID=796224" alt="Europe PP" border="0" />Europe have reached their highest <a href="http://www.icis.com/chemicals/polypropylene/">Polypropylene</a> (PP) prices.</h2>
<a href="http://www.icis.com/chemicals/polypropylene/">Polypropylene</a> (PP) prices in Europe have reached their highest level since September 2012, and are less than €100/tonne below their all-time high of €1,390-1,430/tonne FD NWE on a net basis, in March 2011, sources said on Friday.

“Customers acknowledge there’s an unavoidable increase,” said a spot seller ,”but prices are high and buyers are cautious.”

The European PP market is in a finely balanced supply/demand situation, however, and the €15/tonne increase of the July <a href="http://www.icis.com/chemicals/propylene/">propylene</a> contract last week is putting more upward pressure on PP prices in July.

Some sellers have been <a href="http://www.icis.com/Articles/2014/07/01/9797321/Turkey-PP-sellers-aim-for-higher-July-prices.html" target="_new">pitching hikes</a> above the €15/tonne propylene increase, but many buyers are offering heavy resistance at anything above this.

Some are attempting to achieve lower increases.

“I’ve not settle[d] yet,” said one buyer.  “Producers want to get at least the monomer and  I am trying to pay something less.”

There has been no evidence of PP settlements below the plus €15/tonne of the propylene contract, and the fine supply/demand balance makes the possibility of producers relenting at anything less than plus €15/tonne unlikely. Much business is still to be discussed, however, and some producers are not satisfied with only €15/tonne up in July.

“We are still looking for plus €30/tonne,” said one producer.

PP availability had been tight in Europe, even short, in May, mainly on tight propylene supply. This has changed dramatically, and propylene monomer availability is now long.

Some PP production issues and the blast at the <a href="http://www.icis.com/chemicals/styrene/">styrene</a> monomer/<a href="http://www.icis.com/chemicals/propylene-oxide/">propylene oxide</a> facility at Moerdijk, the Netherlands, in Europe have lengthened propylene considerably.  Spot monomer, which had been trading above contract only a few weeks ago, is now well below the contract level of €1,175/tonne FD (free delivered) NWE (northwest Europe).

Homopolymer injection PP net prices are now trading at €1,320-1,340/tonne FD NWE, but buying is cautious, as prices are high, and buyers do not want high stocks in a potentially falling market.

“They are not buying one gram more than they need,” said a seller.

There is no sign of falling prices at present, but some sources are concerned that continually rising prices in Europe could lead to more imports, as netbacks improve, thereby putting downward pressure on prices.  This would not be expected short-term, however.

PP discussions for July are likely to be fully settled by mid-month at smaller and medium-sized accounts.

It is used widely in the manufacture of packaging and household goods, and also in the automotive sector.