PE suppliers close July order books in Europe amid firmer August outlook

In Europe, market sources reported that a number of major PE suppliers have closed their orders for LDPE for the rest of July amidst dwindling supply and firmer expectations for August and September.

Supply tightens on lack of imports from Asia and the US

The supply situation has deteriorated recently amid the lack of competitive import offers from Asia and the US. The ongoing rally in freight rates from Asia to Europe as well as the recent disruption of exports out of the US following the Berly Hurricane has been constraining the import flow from these major markets to the bloc.

Not only the disrupted imports, but also some production hiccups across Europe and planned turnarounds between August and September have been taking their toll on current availability in the region. Accordingly, some players expect local producers to hike their prices in August although the majority of players will be absent for summer vacations, especially in Italy.

PE offers from the US detach from being a competitive pressure

Apart from regional tightness, import prices may not regain their competitiveness in the upcoming months. This is because logistical challenges as well as the production hurdles in the aftermath of Hurricane Beryl which hit particularly Houston in Texas may not be immediately resolved. Export PE offers out of the US have reportedly been up recently while this is also likely to give the leverage to European suppliers for renewed hike requests also in September.

August monomer contracts signal price hikes

Monomer contracts are expected to settle with small increases of €20-30/ton in August due to the rising energy markets while PE producers might follow suit. However, some players are skeptical about the workability of possible gains given the ongoing weak stance of demand in the derivative sectors and summer vacations which are expected to hinder trading activities. A buyer commented, “Demand is not likely to improve in the upcoming months. Plus, we are covered with material secured previously; hence, we will limit our purchases in Augst and September.”