Europe’s PP markets struggle to stabilize amid structural imbalances and geopolitical headwinds

Earlier attempts to halt the three-month downtrend in European PP markets bore no fruit, as fresh reductions in July extended the softening streak into a fourth consecutive month. Amid stagnant demand and comfortable availability, sellers had to make further price concessions. However, the pressure from imports has started to ease, as forward-dated cargos from Asian suppliers have lost their competitive edge due to pricing parity with local materials and prolonged delivery windows.

PPH dips below €1000/ton FD Italy, prices at 2-year lows

Although some sellers achieved rollovers, minor discounts of €10-20/ton were also reported in some cases. Producers were not willing to concede to discounts, while a cautious buyer stance and competition in the spot market left them with limited room to maneuver.

In Italy, July PPH deals were concluded at €980/ton FD, 60 days, forming the low end of the range. This marked the lowest level since July 2023. Spot PPH prices in Italy stand at two-year lows, according to the weekly average data on ChemOrbis Price Index.

Buyers were presented with competitive offers for August-September delivery, particularly from the Middle East. Middle Eastern PPH inj. offers were reported at €970-980/ton DDP Italy, 60 days, prompting sellers to align prompt values with these forward levels.

In Northwest Europe, Middle Eastern PPH inj. was dealt at €1000/ton DDP, with delivery in September. Spot prices, meanwhile, hovered around one-and-a-half-year lows.

Some traders were even seen trying to replenish their stocks at current levels, signaling that they viewed prices as near-bottom. However, this did little to lift the general sentiment amid summer lull across the region.

Production hiccups fail to change sentiment

Despite a string of force majeure declarations and production hiccups both locally and overseas, overall supply levels remained broadly comfortable. Sellers acknowledged that while these disruptions provided temporary relief, they were insufficient to alter the oversupplied market balance or halt the downward momentum. A trader said, “Supply is long and prices are under pressure, with most buyers already well-covered.”

Demand puzzle persists amid macro uncertainties

The market’s murky outlook has kept converters away from speculative restocking. Several players noted that demand remained sluggish, with end-user consumption failing to recover in key markets like France and Germany—where economic challenges have prompted shutdowns at manufacturing sites.

Adding to the uncertainty are geopolitical tensions. The recent announcement by US President Donald Trump to impose a 30% tariff on goods from the EU starting August 1 has stirred further concerns across the supply chain. The potential for retaliatory measures and the impact on crude oil and industrial activity have unnerved downstream players.

A market source commented, “Buyers are cautious amid foggy outlook. Possible retaliatory tariffs may influence the entire economy and crude oil, having a direct impact on polymer demand.”

With geopolitical tensions clouding the broader economic outlook and tariffs threatening global trade flows, the EU is accelerating trade negotiations elsewhere to mitigate dependency on the US market. Apart from the newly reinvigorated Indonesia-EU CEPA talks, Brussels is also pursuing closer ties with ASEAN, India, Mercosur, and African partners.

Aug outlook flat, limited upside expected before Q4

Heading into August, most sellers expect a stable to slightly softer trend due to continued demand weakness and thin margins. While some are hoping for back-to-school replenishment to spur activity in September, expectations for any meaningful rebound have been deferred to Q4.

Meanwhile, forward-dated Asian imports have lost their appeal. South Korean PPH inj. offers with October-November delivery were reported at €1000-1020/ton DDP, matching local prices despite the longer lead times. Similarly, offers for South Korean PPBC and PPRC at €1070/ton and €1130/ton DDP, respectively, failed to stir interest.

The prevailing price parity and a lack of buying momentum are not providing regional sellers with the leverage to attempt for hikes in the near term. However, if buyers continue to shy away from imports due to price parity and long lead times, dwindling inventory levels could provide an opportunity for regional sellers to test price hikes by September or October.