PP and PE markets set to rebound from two-year lows in Europe

Firmer expectations have come to the forefront in Europe’s PP and PE markets following a 2-month long downtrend. Regional suppliers intend to issue hikes in February, pointing to higher monomer expectations, supply cutbacks as well as firming in other global markets. This has already led to a shift in the market sentiment, spurring demand for resins.

Prices at a 2-year low

Spot PPH, PPBC and PE film prices have recently fallen to their lowest levels since January 2021, according to the weekly average data on ChemOrbis Price Index. Barring a short-lived rebound in October and November, polyolefin prices in Europe have been mostly on a downtrend since May.

Prices indicate cumulative drops of €700-900/ton or around 35-40% for PE film grades, while PPH and PPBC markets receded by €900-1000/ton or 40-45% at the time.

Monomers awaited higher

Participants share higher monomer expectations for February amid firmer crude, naphtha as well as spot ethylene and propylene prices. Spot monomer prices rose by around €150/ton since early January, according to ChemOrbis Price Wizard.

Hike expectations varied in size, with some of them reaching up to 3-digits for both monomer settlements. Yet, most expectations centered on hikes of around €70/ton for ethylene and €70-90/ton for propylene.

Jan sales a tad better amid firmer voices, delivery delays

Firmer voices for February lured buyers back to the market as the month draws to a close. Indeed, low ends in the PP market disappeared in response to the better buying interest. Some regional suppliers stopped offers ahead of potential hikes. Adding to the scene has been delivery delays for import cargoes and tighter availability from some regional suppliers.

Demand has undoubtedly improved compared to the first half of January. Nevertheless, buyers nibble at purchases as they are trying to avoid building stocks given the uncertain outlook in end markets.

PP supply tighter than PE

On the supply front, participants reported that overall PP supplies are a shade tighter than PE. PP supplies may remain tighter than PE as Borealis plans to shut its PP plants in February for maintenance.

For more detailed production news on plant and producer basis, please visit ChemOrbis Production News Pro.

Will hike attempts fully work?

PP suppliers are likely to issue larger hikes than the propylene’s outcome due to tighter availability. As for PE, hike requests mostly in line with the ethylene’s outcome are found more feasible due to a lack of major supply concerns.

To what extent increases can be absorbed will hinge on demand next month. Despite bullish indicators, overall demand is not encouraging due to low consumption, let alone lower utility costs and the expected arrival of imports. These factors may keep price hikes in check. Moreover, some players remain hesitant about a long-lasting uptrend as any price recovery has proved to be short-lived so far due to the lack of fundamental changes in consumption.