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Downward pressure persists in European PP, PE markets

  • 08/06/2017 (19:19)
The downward pressure on PP and PE markets prevails across Europe in the midst of ample supplies and weak demand. Some traders in Europe are even seen cutting their June offers by larger decrease amounts than that of monthly monomer decreases in an attempt to match the market level.

While no hike attempts are likely, players are expecting a stable to softer outlook for the medium term given weak market conditions, low energy costs and the low season for many applications as well as the seasonal slowdown during summer months. Many converters, “Larger drops may be only confronted by improved demand.”

The sales performance of sellers was deemed as poor in the past two months as buyers were shying away from new purchases in anticipation of price falls. Although demand has slightly improved in the first week of June due to buyers’ need to replenish stocks, it will turn slow again, many players concur.

In the PE market, a pipe producer noted, “Initial June offers emerged with decreases matching ethylene; however, further discounts might be applicable during the month since our demand is 20% less than May. Applying further decreases or not will depend on the extent of the sales pressure on sellers’ side.”

A reseller from Italy commented, “The market is still weak as converters do not seem to be in a hurry to buy. Accordingly, we expect further decreases in the next three months. We hold bearish expectations for the second half of the year as well depending on the possibility of an increase in supply levels owing to the new PE capacities coming on stream in India and the US.”

In the PP market, a converter claims, “It is a buyers’ market now with bearish propylene on one hand and plentiful supplies on the other hand, giving us the upper hand in negotiations.”

A West European producer started offering with decreases in line with the propylene drops in the contract market. A producer source reported, “We do not expect any changes in the trend until August.”

“Although our regular suppliers are offering with different decrease amounts, they are not willing to come below the €1100/ton threshold for homo-PP. Plus, the bearish trend is likely to persist during whole summer period,” confirmed a buyer in Italy.
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