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Moerdijk PO Unit to Restart

Europe propylene long but no distress, eyes on NL derivative restart

08 January 2016 14:11 Source:ICIS News

ICIS analysisLONDON (ICIS)–European propylene supply remains lengthy but for the most part is considered manageable although there is clearly an element of “wait-and-see” regarding the supply and demand balance in view of the upcoming restart of the Ellba propylene consuming unit in Moerdijk, the Netherlands, market sources said on Friday.

“We still have relatively high stocks,” said a source, adding “but no one is panicking.”

“We are getting asked if we are interested to buy, but nobody is in distressed mode,” a second source said, “we are getting offers from all over the place but they [sellers] are not willing to give firm price offers.”

Some sources said that a combination of  recent exports plus the general seasonal January improvement in demand together with an expected restart of the Ellba styrene monomer/propylene oxide (MSPO-2) unit in Moerdijk by month end, had taken some of the bearish sentiment off the market.

Some logistical issues – congestion leading to discharging delays – were also heard to be hampering fresh activities.

Spot polymer grade propylene (PGP) has recently traded at discounts of 7-10% to the prevailing January contract price of €620/tonne FD (free delivered) NWE (northwest Europe).

While some sources suggested that deeper discounts around 15-20% were still available in some areas, there was little evidence of it at present.

“There is some pressure in some pockets,” a third source said, adding “ sellers have indicated single digit [discounts] but double digits could be achievable.”

Overall, sources said the market was quite quiet.

“We haven’t made any spot deals as all are still covered or haven’t really started yet,” said a fourth source.

“Demand is good, but there is no rush to buy though in a long market,” a propylene consumer said.

The situation even looks to have improved for non-polymer derivative producers who had struggled for the best part of 2015 from a lack of competitiveness on the global market.

“No doubt on paper, we are more competitive,” a second propylene consumer said adding that the question was whether the situation would be sustained.

“We really have to wait and see.”

 

http://www.icis.com/resources/news/2016/01/08/9959016/europe-propylene-long-but-no-distress-eyes-on-nl-derivative-restart/