Oil roller coaster in July H2 fails to derail most polymer rallies

Just two weeks ago, the question was whether the renewed war premium in crude oil could finally put a floor under polymer markets after months of relentless declines. Brent crude extended its rally far beyond expectations, climbing from the mid-$80s/bbl in H1 July to briefly settle above $100/bbl on July 23 as geopolitical tensions in the Middle East intensified. This visibly shifted the sentiment upwards in Asia including China, Southeast Asia and India as well in Türkiye and Egypt while the slump slowed down in Europe.

Yet the oil surge proved short-lived. Within just a few trading sessions, Brent moved down to the low-$80s/bbl, suggesting a swing of more than $15/bbl within less than a week before closing July around $90/bbl.

The sharp fluctuation tested the resilience of global polymer markets. Yet while the correction introduced greater caution in some regions, it largely failed to overturn the bullish sentiment that had emerged during the oil rally. Instead, regional supply-demand fundamentals continued to dictate market direction, with China standing out as the only major market where crude volatility clearly derailed a cost-driven recovery.

Europe: Sellers hold firmer ground as low ends disappear

Europe’s PE market continued to stabilize despite the retreat in crude oil. Aggressive discounting has eased in recent weeks, with the lowest price levels gradually disappearing as suppliers sought increases in line with higher feedstock costs.

Buyers remained cautious ahead of the summer holidays and weak downstream demand continued to limit purchasing activity. Still, the oil correction did little to reverse sellers’ firmer stance.

Rather than triggering renewed price erosion, the decline in crude merely reinforced buyers’ resistance to further increases. The broader market tone remained noticeably firmer than in previous months, although any sustained upward trend will still depend on a post-holiday recovery in demand.

After several months of continuous price erosion, Europe’s PP and PVC markets appear to have reached a temporary floor. The recent recovery in crude oil and feedstock costs has not been sufficient to reverse the prevailing weak-demand environment, but it has brought the downtrend that began in May to a halt. As a result, expectations for August are centered on largely stable prices, although suppliers are expected to test modest hike requests depending on the August monomer settlements and any further shifts in the geopolitical and energy landscape.



Southeast Asia: Buyer hesitation rises, sellers remain resilient

The sharp swings in crude oil had a greater impact on buyer behavior than on pricing strategies across Southeast Asia’s PP and PE markets.

Buyers became increasingly reluctant to commit to fresh purchases as energy prices fluctuated rapidly, preferring to cover only immediate needs. Sellers, however, largely maintained firm offers, supported by replacement costs and expectations that upstream markets could remain volatile.

As a result, the oil correction slowed trading activity rather than reversing the market’s underlying direction. The gap between buyers and sellers widened, but bullish pricing sentiment remained largely intact.

China: Cost-driven rally loses momentum

China’s polymer markets emerged as the clearest exception to the broader global trend.

After staging a two-week rally on the back of stronger crude oil, feedstock prices and firmer Dalian futures, the market quickly lost momentum as oil prices turned sharply volatile. The abrupt reversal exposed the rally’s heavy reliance on upstream cost support rather than improving fundamentals.

Falling crude prices weighed on Dalian futures, which in turn pressured domestic spot PE, PP and PVC markets. Across the PE market, HDPE and LLDPE film prices moved lower, while LDPE film largely held its ground. Import PP and PE offers initially remained firm before gradually softening by mid-week in line with weaker domestic sentiment.

Weak seasonal demand continued to discourage buying, while unpredictable movements in crude oil and futures markets made both buyers and sellers increasingly cautious.

Türkiye: Tight polyolefin supply outweighs crude correction

Türkiye’s polymer markets remained largely unaffected by the retreat in crude oil.

Although energy prices corrected sharply following the easing of geopolitical tensions, tightening import and local availability and expectations of higher replacement costs continued to underpin PP and PE. Meanwhile, PVC lagged due to comfortable supply inside and waning demand, capping more visible hikes.

Sellers maintained firm pricing ideas and prepared for further increases in August or even in September, while buyers remained cautious, particularly for distant cargos without exerting significant downward pressure on prices. Indeed, both were stuck between higher upstream costs compared to late June lows and a foggy downstream demand outlook.

Unlike China, Türkiye’s market continued to derive its strength primarily from tightening supply conditions for select products, allowing bullish sentiment to survive despite lower crude prices.

India: Producer-led rally continues despite comfortable supply

India’s domestic PE, PP and PVC markets also maintained their upward trajectory despite the correction in crude oil.

Domestic producers continued to implement successive price increases, citing higher upstream costs and tighter replacement economics. PVC recorded the strongest gains, supported further by the implementation of the Minimum Import Price (MIP) policy.

At the same time, comfortable supply conditions, transit cargoes and ongoing imports continued to temper buyer enthusiasm. The latest rally therefore remains largely producer-led rather than demand-driven.

Whether these higher prices can be sustained will largely depend on post-monsoon demand, which will need to absorb existing inventories and incoming import volumes.

Egypt: Market bulls shrug off large oil swings

The market also remained broadly resilient despite crude oil’s sharp reversal. Higher replacement costs and expectations of firmer August import offers continued to support PE, PP and PVC sentiment, while local producers were expected to seek higher prices. Nevertheless, subdued demand and buyer caution over volatile upstream markets kept trading activity limited, suggesting that cost support outweighed any negative impact from oil’s late-month decline.

Regional fundamentals prove stronger than oil volatility

The late-July collapse in crude oil prices tested the strength of polymer markets worldwide, but its impact varied considerably from one region to another.
Europe, Southeast Asia, Türkiye and India largely preserved their firmer tone despite the sharp correction, as supply conditions, replacement costs and producer discipline continued to support prices.

China, by contrast, saw its recent rally lose momentum almost immediately after upstream sentiment weakened, highlighting the market’s continued reliance on cost support in the absence of stronger demand.

The contrasting regional responses suggest that while oil remains an important catalyst for short-term sentiment, market fundamentals continue to determine whether price rallies can withstand periods of heightened energy volatility.