March hints at further hikes in European PP, PE markets

February PP and PE deals have been concluded with increases at par with or surpassing the upsurge in olefin contracts depending on the grades. Players have now shifted their focus to the March outlook, with expectations calling for another round of gains.

3-digit hikes fail to pass on PP deals

Tepid demand as well as buyers’ high inventories forced some sellers to revise their initial hike attempts of €100/ton down to smaller increases of €50-80/ton over last month. Suppliers lamented poor buying interest as converters were already covered with material purchased in the previous months, while others were still waiting for overseas cargoes secured in late 2024. In the import market, meanwhile, Asian offers were reported almost in line with the current spot ranges in Europe. Hence, buyers preferred to stick to the local material, also considering the low euro/dollar parity as well as delivery delays.

As for March, market participants mostly agree that the PP market is set to witness another round of hikes, albeit at a slower pace. The next monomer contract is expected to settle stable or slightly firmer, while uncompetitive import prices as well as producers’ determination to boost their margins are likely to sustain the firmer scenario. However, the upcoming demand trajectory remains a question mark amidst the start of high season for some applications on one side and the ongoing weakness stemming from murky economic outlook on the other side.

PE producers achieve hefty gains

Increases of €50-100/ton passed on February deals. Meanwhile, the upward momentum gained speed in the LDPE market. Sellers concluded their sales with gains of around €50-80/ton for HDPE, MDPE and LLDPE grades, while LDPE absorbed larger hikes of €100/ton given short supply and uncompetitive import offers.

Meanwhile, some producers closed their order books in early February, stating that they are sold out after achieving good sales in the midst of tight availability. A distributor of a South European producer commented, “Our supplier stopped February orders and from now on any extra allocations will be subject to further hikes. The March outlook is firmer as suppliers need to recover their margins.”

Traders selling non-European material, meanwhile, confirmed receiving firmer prices from the US, the Middle East and Asia amidst logistics issues and low euro/dollar parity.

Renewed hikes on horizon

PP and PE players are on the same page that regional producers might seek further increases in March amid supportive factors. Expectations for stable to slightly firmer monomer settlements as well as uncompetitive import offers from almost all nearby markets are giving suppliers leverage to boost margins. However, the size of increases might be limited compared to February as many buyers hold high stocks and they might reduce their purchases. Accordingly, the state of demand will have the final say.