Europe’s PP and PE markets retrace some of earlier losses in September

Initial September offers were revealed with up to 3-digit increases in Europe’s PP and PE markets. Prices have pared some of their earlier losses after mostly bottoming out in August, supported by mounting cost pressure and easing stock levels.

It remains to be seen to what extent increases will be absorbed as the month proceeds. Polyolefin markets have been calm due in part to the pre-buying activities on the buyers’ side as well as unsatisfactory demand in derivative sectors. Meanwhile, Italian players have been mostly away from the market as they are attending the PLAST 2023 being held from the 5th to the 8th of September at Fiera Milano.

PE sees larger hikes compared to PP

Both PP and PE producers have sought increases beyond the monomer hikes for September, while initial PE offers have seemingly seen larger increases when compared to PP. Although both PP and PE suppliers are free from stock pressure, inventory positions have been better managed among PE suppliers, with some pockets of pre-buying seen last month.

LDPE, LLDPE move back above €1000 FD Italy

Major producers managed to deplete their excess stocks in the last couple of months, while they also closed their order books earlier than usual in August. Elusive availability amid production hiccups on some producers’ side supported more visible hike requests for LDPE.

Apart from reduced supplies, PE prices have been also under an upward pressure after dipping to multi-year lows. Indeed, the historical data revealed that spot LDPE and LLDPE C4 film prices in Italy moved below the €1000/ton FD threshold only a couple of times since ChemOrbis started to keep records in 2008. The weekly average prices hit 3-digit numbers back in 2008-2009, 2019-2020 and 2023, respectively. LDPE and LLDPE prices below the €1000/ton FD level disappeared as recently as August.



ChemOrbis Price Index also revealed that PE prices both in Italy and West Europe have been on a downward trend since May 2022, barring short-lived increases since then. PE prices erased pandemic-era gains and plunged to critically low levels, which coupled with strong costs gave sellers no chance but to issue hikes. Accordingly, PE grades rebounded from nearly 3-year lows.



PP also sees corrections after dipping to 3-year low

A similar scene was observed in Italy’s PPH markets. Prices below the €1000/ton FD level faded as of last month after markets tracked a mostly downtrend since May 2022 to hit nearly 3-year low. Other PP grades also bottomed out last month amid sellers’ efforts to recover their margins.



Buyers resist initial offers

Buyers both in Italy and West Europe have stuck to the sidelines after receiving initial September offers with increases of up to €100/ton for PP and €150/ton for PE. Initial hike requests have been met with a lukewarm response from buyers, who remain skeptical about the feasibility of increases larger than the monomer’s upsurge.

A distributor reported, “Supply is not ample, which can support markets. But demand is likely to be patchy as some buyers are already covered thanks to the pre-buying activity in August.”

A few sellers said, “Only €60/ton hikes can pass on PP deals as the market is not strong enough to support larger hikes. Buyers struggle with weak end markets.”

Nonetheless, participants believe some PE grades can absorb larger increases depending on the starting level and inventory positions, let alone sellers’ motivation to achieve a long-awaited correction in prices. LDPE and PE100 pipe grades are deemed a shade tighter, which may support hikes larger than €75/ton.

As a side note, participants find it unlikely that the markets will extend gains into another month as end demand is stagnant. Some buyers are covered for the upcoming months due to lower manufacturing rates. Buyers are not willing to engage in fresh import cargos as they are almost at par with local ranges and initial October expectations are mostly stable to softer.