Several polypropylene producers have reported granting larger-than-planned reductions to their June contract price as their order intake slowed, sources said.
They were initially aiming to limit the cut in June to below the Eur40/mt ($56/mt) reduction in feedstock propylene pricing, in order to offset the increases they failed to pass through in April and May.
But as the month progressed, several producers admitted that even minus Eur40/mt proved to be relatively optimistic, as most converters opted to delay their orders and wait for prices to weaken further.
"We gave minus Eur40-50/mt initially. Now buyers are asking for more," a producer said.
A number of suppliers confirmed bowing to up to a Eur70-80/mt reduction in certain contracts.
"In exceptional cases, we gave minus Eur80/mt," a producer said, adding this was prevalent in southern Europe, including Spain and Portugal, where European products were competing with aggressive offers from the Middle East.
"In homo injection and extrusion, the price development is minus Eur50-70/mt," he said, adding he may only sell up to 90-95% of June volumes as orders remained slow.
Another supplier also confirmed settling some contracts at minus Eur70/mt, with his overall reduction for June averaging at around Eur50-60/mt.
"Last month, a lot of people try to empty their pipelines as quickly as they can. They're not filling up the pipeline yet. They're in a wait-and-see mode," he said.
The majority of converters confirmed buying only quantities that will cover their short-term needs as they expect further price reductions in July when the market enters a seasonal demand lull and amid faltering propylene and polypropylene prices in the rest of the world.
Settlements reported by several producers and converters this week were in a range of Eur1,490-1,550/mt FD NWE for homo injection grade. Contract settlements have consolidated at around Eur1,520-1,525/mt so far in June, down Eur55/mt from May.
The last time PP contract prices were hovering at these levels was on March 2 this year when they were assessed at Eur1,525-1,530/mt, according to Platts data.
