European PP, PE players discuss near-to medium-term outlook

In Europe, PP and PE prices extended their downtrend into the third month, with reductions of up to €50/ton passing on November deals. The pressure stemming from sellers’ high stocks as well as thin buying interest forced many suppliers to concede to discounts to entice sales, defying higher monomer settlements. Meanwhile, some regional producers managed to avoid drops and closed their deals with rollovers, especially in the contract markets.

Players have recently shifted their focus entirely to December, as they wonder whether the bottom levels will be reached or not in the last month of the year.

Producers’ margins erode further in November

The stable to softer trend in the PE and PP markets defied the higher monomer contracts in November, eroding producers’ margins further. The weak stance of demand together with competitive non-European origins, especially the US for PE, sent polyolefin markets to multi-month lows.

This was the second month that producers notched margin losses. Examining the PP market as a case in point, the graph below formed by ChemOrbis illustrates a consecutive decline in producer margins, which fell below €200/ton in November. Meanwhile, producer margins in September hit their highest level since March this year.



As for PE, LLDPE margins remained in the negative territory for the second straight month, with the discount over the monthly ethylene settlement growing amid year-end destocking activity. The spot LLDPE C4 film market traded nearly €80/ton below the November ethylene contract level in November.



However, regional suppliers seem determinate to avoid additional decreases, citing the lack of profitability amid high production costs. A distributor of a West European producer commented, “Producers are losing money as they sell below costs. They might reduce availability further in the long term as supply continues to outweigh demand.”

Will suppliers be able to halt the downturn in December?

As the year draws to a close, market participants mostly agreed on the fact that PP and PE prices might witness another round of reductions, albeit smaller compared to November. The main reason behind softer expectations is the lack of hopes for an improvement in demand due to the short month in terms of working days as well as sellers’ aim to continue clearing their warehouses ahead of the year-end pause.

However, local producers are likely to open the month by seeking rollovers amid their margin recovery targets. Meanwhile, both the next ethylene and propylene contracts are expected to settle with small decreases owing to lower feedstock costs.

Demand will have the final say

When it comes to Q1 2025, January expectations call for mostly stability as players do not expect prices to post major variations also considering the arriving cargoes from the US for PE and South Korea for PP purchased at competitive levels during October-November period.

However, the medium-term outlook is mostly firmer as regional producers might try to hike their prices as of February given the lack of competitive imports after rising freight rates as well as unfavorable USD/Euro parity. A stronger USD weakens the euro, increasing the cost for European buyers to purchase commodities priced in USD, thereby reducing its competitiveness.

Nevertheless, demand will play a crucial role in setting the direction of the market in the near and medium term amidst concerns about the current geopolitical situation and the potential impact of US elections on trade flows, considering looming tariffs.