Petrotahlil - Polypropylene (PP) demand in Europe has beaten expectations in recent weeks, and some applications have fared better than expected, but there is still a lot of uncertainty over the future, and not all converters report good volumes.
Automotive demand has been strong, with one supplier saying it could not keep up with the volumes requested from the compounding sector.
There is some scepticism over how long this demand will last, as the upturn has been so swift and the general outlook for economies in Europe is not strong.
Appliances have also seen a surge of pent-up demand following earlier lockdowns. Caps and closures are strong and non-wovens continue to be sought-after for medical protective equipment.
Food packaging has returned largely to normal, but this demand is mixed, and some manufacturers are taking a hit on non-essential food items, such as festive-related packaging at the end of the year and into 2021.
Competition in finished film markets- also in the polyethylene (PE) sector- is strong, and there is concern over the future, when salary support schemes come to an end.
There has been some firming in sentiment in the spot sector as importers have found better netbacks in other regions. As well as fewer imports, exports have been leaving Europe, so while there is no shortage of any PP grade, sentiment that there was oversupply has diminished.
Total’s force majeure on PP, called in early August, has not had much impact on the market, as buyers have been able to source product elsewhere.
Companies are now looking forward to their 2021 budgets, and comparing expected volumes mainly to 2019, as 2020 has been such an unpredictable time. One PP player said its budget for next year would be down by at least 5%, compared to 2019.
There is a good deal of concern over the fourth quarter, and buying is cautious.
“There won’t be much change in PP pricing over Q4,” said a large buyer. “There’s still enough [product] around.”
One region that could see an upturn in demand in the fourth quarter could be the UK, as buyers prepare for Brexit. Most converters are planning to add some extra stock in November.
PP is used in packaging, the manufacture of household goods, and also in the automotive industry.
Follow us on twitter @petrotahlil
Source : ICIS