June was a disappointing month for PP producers. All attempts to withhold some of the €40/t ($46) advantage resulting from the lower propylene fixing failed. But worse than that, at the end of the month the rebates granted exceeded the fall in the reference contract price. Averaged over May and June, PP producers forfeited €40/t in margins, due to an influx of imports that undermined the market price. This gave buyers a reason to wait until notations dropped.
Converters’ hopes of further price reductions should be fulfilled in July, as the propylene contract was fixed lower. PP will surely follow the downward trend. Demand dynamics will be enhanced by buyers who leverage falling prices for speculative purchases. The danger is that a minor run on material could have led contract prices to turn around and start rising during the month.