European PP and PE markets start 2025 on a stable to slightly firmer note

Regional PP and PE markets have been calm as the post-holiday environment settles in, with buyers returning to their desks from January 7th. Initial offers have emerged mostly with rollovers in line with the monomer contracts, while some price hikes have also been observed. Previous low ends may fade in the coming weeks, contingent on the balance of supply and demand.

Contrary to prior expectations, some regional suppliers strive to push prices up from nearly one-year lows depending on the grade. Their efforts are buoyed by not only profitability concerns but also diminishing stocks of imported materials, which they believe will be crucial in enabling these hikes. Still, it remains to be seen to what extent hikes will see acceptance as the overall demand outlook remains lackluster, hindered by ongoing macroeconomic challenges and geopolitical uncertainties. Buyers who secured their requirements in the November-December window are not expected to rush to purchase fresh cargos in early January.

PP market: A cautious start with limited price flexibility

The European PP market has started the year with mostly rollovers as well as modest hikes, while hefty hike intentions from a West European producer have yet to materialize. A key factor to watch in the PP market is the potential for reduced imports, which could lead regional suppliers to raise prices.

A participant noted, “It is still too early to gauge the post-holiday sentiment as players have just came back from holidays. Hence, suppliers are hesitant to set prices too high.”

In the light of current demand conditions, PP prices may move sideways rather than absorbing initial hikes. Some players are even willing to offer special deals, particularly for larger volume sales, if demand remains weak. As such, there could be some spot cargos available at small discounts in case of firm bids. A key market player said that they may revise prices depending on how demand develops in the coming weeks.

However, price increases seem more plausible between February and March, with players eyeing potential upward price movements as the winter months draw to a close and demand shows signs of gradual recovery.

PE market likely to absorb hikes, LDPE shines out

In the PE markets, similar trends have emerged, with rollovers to some hikes. Regional suppliers think they may achieve increases particularly for LDPE, which is a shade tighter than other grades. Indeed, some traders reported that low ends for LDPE started to fade as initial offers emerge. This was attributed to the dwindling import volumes.

Indeed, fresh US PE offers rose by around €40/ton, which dampened buying interest in the distribution channel. Traders selling US material want to apply hikes of €20-30/ton on their January prices amid rising offers.

However, large hike requests of up to €70/ton from a West European supplier have been deemed unworkable. A major market participant has made it clear that they are open to negotiations should buyers express interest in securing fresh volumes. Despite large hike requests of €70/ton, sources believe that only smaller increases of €20-30/ton are likely to be accepted in deals. Apart from LDPE, other PE grades may follow a stable to slightly firmer trend.

Producers to hold firm

As 2024 drew to a close, the competitiveness of imports diminished, driven by rising freight rates and lower euro/dollar parity. After coming nearly on par with the local market, imported resins saw a decline in buying interest. This, coupled with squeezed producer margins, shifted expectations toward a firmer market outlook.

A West European producer’s hike attempts of €70/ton could be a leading indicator to give the market waiting for further clarity some leverage. Indeed, most suppliers want to hinder the downturn stretching as far back as September 2024.

Mainly stability is likely to prevail for PP. This forecast hinges on the unlikely prospect of a robust demand recovery in early 2025. Meanwhile, the possibility of price hikes for certain PE grades is relatively higher.