Subdued PP, PE demand weigh on March hikes in Europe

Regional players have reported receiving new polyolefin offers from their suppliers with increases from last month. However, some distributors have been forced to trim their initial hike targets since activity has not been up to expectations so far. Even rollovers passed through deals in some cases as the prolonged production hiccups outweighed supportive costs in the shade of recession.

This was also the case back in February, when both PP and PE markets saw triple-digit hikes initially before suppliers stepped back from their offers in response to a lack of buying enthusiasm among converters.

 

Increases match monomer hikes in most cases  

March ethylene and propylene contracts settled with moderate increases, lending support to downstream sellers for their recent pricing policy. Initial PP and PE prices were officially revealed with hikes of €30-50/ton in most cases before sellers trimmed their larger hike targets.

“Although sellers need to recoup their margin losses, they tried to entice better buying interest from their customers ahead of holidays,” affirmed multiple players in the region. European players are set to start celebrating the Easter holidays on April 9.

Thin buying interest comes to the fore  

The main culprit behind smaller increases in PP and PE prices has been disappointing demand despite the seasonal hopes. Whilst Europe continues to tackle the impact of the economic challenges, reduced consumption within the bloc appears to be keeping purchasing amounts at a bare minimum.

A distributor in Italy reported offering HDPE inj. with €40-50/ton hikes. “We met buyers’ resistance. Prices may be adjusted down in the days ahead if sellers succumb to lackluster demand,” he admitted.

On the side of derivatives, converters from several industries reported lowering their product prices to spur their end sales. However, the move has proved unworkable in most cases for now.

Supply considered tight for certain products 

On the other side of the coin, the combination of supply management via lower run rates and unexpected production hiccups has continued to underpin both markets this month. In the PP market, copolymer trades have been tight while HDPE b/m and LLDPE were also considered limited.

Head stretching question: When will demand pick up? 

Some players postponed their hopes for a demand recovery until after the holidays, citing the lingering economic woes that may mitigate the impact of seasonal factors. Nonetheless, others believe that activity may be a tad better in the latter part of March if buyers decide to replenish some stocks ahead of April which will be a short month in terms of working days.

Pricewise, the short-term outlook hints at rollovers to small gains in transactions, while more sellers will likely step back from their hike targets beyond the monomer increases so long as demand remains lull.