PP, PE prices in Europe to sustain upward momentum in January

In Europe, polyolefin producers approached the market with hike requests for December on the back of higher monomer contracts. The PP market was stronger thanks to more balanced supply-demand dynamics whereas the PE market was not as firm as PP, feeling pressure from relatively comfortable supplies and slower demand.

Accordingly, PP sellers have managed to achieve increases of €20-30/ton across Europe so far in December. Besides, early expectations suggest that PP prices are likely to increase further by around €50-80/ton in January. Some participants expect increases to persist throughout the first quarter, with a distributor commenting, “The trend might turn down only starting from April.” They are pointing to the increasing transportation costs, and strong energy and feedstock prices to justify their expectations.

Therefore, several converters have done pre-buying or engaged in import business, although there are still others who preferred to avoid building stocks at the year-end.
An Italian buyer reported, “Our regular West European suppliers were firm on their hike targets and we concluded deals with €30/ton increases. We are planning to secure some extra stocks amid talks of further increases of around €50/ton in January. However, we have noticed that there will be many import cargoes from Korea, which may keep European sellers’ hike requests in check for January.”

A compounder from Germany reported that they are receiving the cargoes ordered in November. He said, “We are not building stocks ahead of the year-end in spite of the bullish talks of larger hikes for January.”

In the PE market, rollovers to increases of up to €20/ton started to pass on December deals. Buyers were seen ordering small quantities or they are skipping buying unless they are offered competitive prices. This is despite the fact that expectations for larger hikes of up to €50-80/ton are pronounced for January. A distributor from Italy noted, “Our customers told us that they can find lower offers, especially for HDPE. However, our Middle Eastern supplier is mulling over hikes of €80-100/ton for January prices.”

Although players widely concur that large hikes will not be absorbed in the PE market given comfortable supplies, others underscore that some suppliers are avoiding giving additional availability, which will cause existing stocks to melt down. Therefore, buyers, who limit their purchases this month, might come back to the market in January, they argue.

In Italy, some sellers reported, “Our Turkish supplier is not giving LDPE offers for January while we were rejected by our West European supplier when we asked for additional spot volumes of HDPE.”

Accordingly, some PE buyers were seen building safety stocks, albeit not widely. A packager who has settled its December GA with his regular South European supplier with €20/ton increases said, “Prices in the spot market are competitive and we are offered aggressive locally-held offers for non-European origins with prompt delivery from traders. Therefore, we are building some inventories.”