10. Mar. 2010
In Europe, propylene costs have been on a constant firming trend for some time due to the persistent production issues in the region. Although spot propylene values gained further ground last week rising to €950-960/ton FD NWE, finding an extra support also from higher crude hovering above $80/bbl and soaring naphtha prices, competitive PP offers continue to emerge both in Turkey and Italy.
Taking the recent spot propylene values into account, a theoretical cost of producing PP corresponds to €1100/ton after adding an estimated conversion cost of €150/ton disregarding inland freight rate. Even though PP sellers are asking for increases of €50-75/ton for March, the Italian market is still seeing offers below this €1100/ton threshold, which sellers are trying to surpass for homo PP. The general homo PP offer level reported from sellers stands at €1110-1200/ton FD North Italy, 90 days deferred payment. However, late last week a buyer reported having received an offer for a West European origin at €1080/ton with the same terms while a second buyer purchased some cargoes at €1050/ton from a West European producer on FD North Italy, cash payment basis.
In Turkey, the overall European offer range for raffia is quoted at an adjusted level of €1045-1090/ton CFR Turkey, cash. Although it represents a slight increase from the prior week as a result of the increase attempts of sellers, these offers are still standing below the neighboring Italian market as well as the theoretical production costs for European PP.
The existence of such offers affirms the weak state of demand in Europe, according to some sources. It can also be a sign of higher than anticipated stocks at sellers, they argue. Competitive offers are randomly emerging in the Italian market while more cargoes with cheaper prices are diverted to Turkey.
[Chemorbis]
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