The surprisingly lively demand in January allowed producers to improve their margins, but for the most part – for both standard PP and compounds – they pocketed only slightly more than half their cost relief from the decline in the reference contract.
For standard PP, the noticeable increase in demand came less from the end markets than from the topping-up effect at the beginning of 2019. Simultaneously, order activity also was spurred by fresh plant outages. In addition, uncertainty over Brexit led to an unusual surge in orders, in particular for UK material.
The propylene reference contract rolled over from January to February. Leveraging the tightening trend, producers of standard PP will try to push through hikes and may enjoy moderate success.