Logistics snarls propel import PP, PE offers higher in Europe

In Europe, players returned to a changing sentiment after summer holidays as prices for non-European origins have been revised upwards in tandem with rising shipping costs amid logistical mishaps. Suppliers from the Middle East, the US and Asia were seen lifting their offers to Europe as September kicked off.

Supply bottlenecks support hikes for import origins

Shipment issues from the Middle East and Asia amid container shortage curbed the import flow to the bloc, which in turn led to diminishing availability.

South Korean PPBC inj. was offered with increases at €1700/ton CIF Italy, 60 days 10 days ago. Meanwhile, a distributor reported hikes of around €100/ton for South Korean material with delivery in September, blaming sky-high freight rates from Asia. US mLLDPE C6 was dealt at €1450-1500/ton DDP Italy, 60 days, indicating €60/ton hikes for August. This is due for arrival in September-October, meanwhile.

Moreover, prices on the low ends faded from the spot market as non-European origins saw hikes in the past weeks. PE offers from Turkey and Central Eastern Europe were adjusted up, which erased some of their earlier losses. A buyer affirmed to have received Turkish LDPE offers above August levels.

Eyes on spillover impact from Hurricane Ida

Adding to the recovering sentiment emanating from lower import availability has been disrupted production at several petrochemical hubs in the US driven by Hurricane Ida. ExxonMobil, Pinnacle Polymers and DowDuPont’s downstream units were taken offline following the issue.

Heading towards the last quarter of 2021, US PE material will remain limited, as was the case during most of the year, amid robust domestic demand and logistical hurdles.

What will be the reflection on European origins?

Fresh September offers from regional sources were pending last week, with expectations centering on a stable to slightly firmer trend. Sellers aim to push for small hikes on tighter grades like LDPE, mLLDPE and PPBC, pointing to the difficulties to procure raw materials.

However, additional hikes may not be absorbed as Europe’s spot markets remain inflated, with buyers lamenting about restricted end orders in certain sectors. Some of them also did pre-buying during summer vacations, while regional PP supplies are expected to improve after lifting of the force majeures. Several players expect prices to move sideways, with firmer non-European prices and logistics issues hindering a possible drop in the short-run.