PP, PE buying cools off after buyers replenish stocks in Europe
In the spot markets, July deals were concluded with decreases of €20-30/ton for LDPE and LLDPE amidst lower monomer settlements for the month. More significant drops materialized for HDPE, meanwhile, as levels were down by €50-70/ton for film and €30-50/ton for b/m and inj. Following the drops, PE prices sank to more than 2 year low, according to ChemOrbis Price Index. PP cargos were traded €40-70/ton below June, meanwhile, surpassing the decrease on July propylene contract.
The new round of price reductions caused activity to revive earlier in July, as was previously foreseen in ChemOrbis Plastics News European PP, PE set for 4th bearish month, is bottom near? . Yet, buying interest across the region is now losing steam given the approaching summer holidays in August.
A PE converter in the Netherlands stated, “We plan to halt our production for 3 weeks in August. Nonetheless, we have been ordering more volumes than we usually do due to our good end product business.” A packager in Italy similarly highlighted, “Demand has slightly improved as buyers are securing their cargos ahead of the summer holidays.” A buyer in Belgium also planned to build some stocks this month due to lower prices.
“Manufacturers prefer to purchase near or prompt cargos even if their prices are not as competitive as materials with longer delivery options. We attribute the uptick in demand to the fact that buyers expect the downtrend to come to a halt after holidays,” a distributor in Italy opined.
A PP trader in Germany reported selling good volumes this month but added that demand is cooling off now. He believes the market may turn to steady or even slightly up next month depending on the direction of energy costs. According to another trader in France, activity will slow down next month further as most factories will suspend production for 2-3 weeks throughout holidays.
Converters are at odds about the August outlook as some of them project stabilization and even hike attempts following the long bearish trend in the PP and PE markets. Regional producers may try to recover their margins, they say. Others, however, point to the slower activity given the long summer holidays and a lack of serious supply concerns. The upstream markets are not lending support to firmer expectations either, they say.
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