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Are PP, PE markets on the brink of a softer trend in Europe?

  • 19/10/2017 (10:10)
In Europe, players in the polyolefin markets are voicing early November expectations on a stable to softer note given cooling demand towards the year-end and the lack of supply concerns. After two months of price hikes, the sentiment seems to have weakened in the PP and PE markets, although there is no visible downward pressure from the upstream markets.

Sufficient supplies and unpromising end-demand are causing a cautious stance among buyers while bearish expectations are also adding to their reluctance. An Italian PP buyer commented, “We are not willing to buy fresh volumes as our end-business has now slowed down. We only purchased small volumes from our regular West European supplier as we expect a softer trend in the PP market in the last two months.”

Affirming the lack of demand, a distributor admitted, “We sold 20-25% less than normal this month as buyers are on the sidelines.”Another distributor in Belgium noted, “Our stocks are not high and we refrain from ordering large quotas from our suppliers given weak demand. We heard that many traders are destocking. We expect mostly rollovers in PP prices next month. The market is rather balanced between sufficient supplies and tepid demand.”

A distributor in Italy also thinks that energy and feedstock costs might help keep PE prices at steady levels next month, taking balanced market conditions into account as well.

However, others think that the market may not manage to hold stable next month. “Buyers are well covered and it appears that some of them skipped buying this month as we struggle to conclude deals. Expectations are bearish for November,” said a seller in France.

Unlike the PP market, the PE market faces an additional downward pressure from competitive import offers. A buyer reported, “We received some import offers from traders at competitive prices, but we prefer to wait as we expect lower prices in the local market in November.”

In Germany, a seller reported giving special prices for HDPE given slow demand and comfortable supplies. He added, “HDPE supplies are still comfortable against weaker demand and this product might see some decreases in November. We expect rollovers to €10/ton decreases in November ethylene contracts, meanwhile.”

As for November monomer contracts, there are divergent expectations. Many expectations call for a stable to €10/ton lower outcome in the wake of improving supplies in line with the end of the cracker maintenance season. However, there are some players who foresee slight increases in the upcoming monomer contracts given higher naphtha prices and the slight recovery in the spot propylene and ethylene markets.