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Downturn halts in Europe’s PP, PE and PVC markets ahead of holidays

by Manolya Tufan -
  • 12/08/2019 (09:22)
In Europe, PP, PE and PVC markets started August on a stable to firmer note ahead of the imminent summer holidays after the decreasing trend mostly came to a halt. This defied earlier expectations that do not exclude possibility of seeing decreases in line with the seasonal slowdown in regional markets.

European PP markets meet summer holidays at 2-year low

Rollovers started to pass on initial PP deals in most cases, putting an end to 2 months of decreases. Better buying interest for cargos with later delivery and stable propylene contracts helped prices stabilize after prices posted cumulative decreases of around €90-100/ton for homo-PP inj. and PPBC inj. since the latter part of June, according to the weekly average data on ChemOrbis Price Index.

Data also reveal that homo-PP and PPBC inj. prices in Italy and Northwest Europe hit their lowest levels not seen since around August-November 2017.

Converters purchased beyond their needs due to the favorable prices and sellers were satisfied with their sales for August.

Initial PE, PVC offers reverse course on higher ethylene

Initial PE, PVC offers shifted direction after 2 consecutive months of softening given higher ethylene settlement. However, earlier expectations were mainly based on a stable to softer trend due to the holiday mood.

Producers hike contract PE offers

Some producers applied €10/ton increases on their PE offers in the contract market. However, sellers in the distribution channel applied rollovers while a few deals were already closed at stable levels from last month. This stemmed from the lack of trading activities as the holiday mood kicked in.

In any case, pricing policies for August halted 2-months of decreasing trend, which pulled some PE grades to a decade low in July.

PVC K67 dips to lowest levels since Dec 2016

According to the weekly average data on ChemOrbis Price Index, spot K67 prices in Italy and Northwest Europe hit their lowest levels since December 2016 as of July.

Sellers reflected 50% of the ethylene hike on their initial PVC offers to recover their margins lost during most of the year while buyers believe that small hike attempts might prove unworkable amid low buying appetite.

September expectations emerge stable to slightly firmer

Players mostly concentrate on the post-holiday outlook, when producers may try to issue hikes in a bid to improve their margins. A distributor also reported, “We expect to see better demand in the second half of August when the market will be mostly back in harness.”

Plus, monomer contracts are expected to settle higher in September amid cracker maintenance works.

However, buyers find an upturn in September unlikely given the recent decreasing trend in naphtha and crude oil prices. They point to the lack of major bullish factors amid economic challenges and slow end markets.

A converter commented, “We secured some PE cargos with rollovers as producers might increase their prices in September, although we think that the market might not absorb any hikes in the medium term as overall end-product demand is weak.”
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