Europe’s polyolefin drops to lose momentum amid stabilizing sentiment

European polyolefin markets show signs of stabilizing after two consecutive months of steady declines. While price drops are still anticipated for June, the pace of softening is widely expected to slow down amid growing expectations that the market may be approaching a floor. Projections for a modest pickup in restocking interest and logistical developments—particularly rising freight rates and maritime disruptions—are contributing to this shift in sentiment, as imports scheduled for Q4 delivery may arrive at costlier levels.

PP: Price erosion may lose pace as July approaches

After a string of decreases since April, European PP markets may be nearing a period of relative stabilization. June propylene contracts suggested rollovers, while players largely expect fresh PP drops of €20-30/ton, driven by subdued demand and comfortable supply levels. Despite these bearish fundamentals, the extent of price erosion is likely to be milder than in previous months, as producers seek to protect margins and buyers begin to inquire ahead of a potential shift later in Q3.

Current lows may stimulate restocking activity

Converters have gradually returned to the market with inquiries, particularly those looking to pre-buy before prices reach a floor. Some players suggest that July could even see modest upward corrections, provided inventory levels tighten and demand improves. Certain buyers may attempt to secure material early to hedge against expected firming by late Q3. This expectation is rooted in the view fresh import prices will lose competitiveness due to rising freight rates. Material purchased now is slated to arrive in September-October, likely at higher cost levels.

Still, the trajectory in July and August will largely depend on inventory dynamics and macroeconomic factors. If producers manage to limit availability, price recovery attempts may gain traction, especially from September onward.

However, any restocking activity is expected to remain limited, as underlying demand has not fully recovered and summer holiday season looms. Converters may opt to capitalize on 16-month low PP prices through limited replenishment, avoiding the risk of overstocking in a still-fragile demand environment.

PE: Market eyes bottom between July and August

PE markets are following a similar path to PP, with June likely to bring further—but less pronounced—price drops compared to May. Most players anticipate rollovers or decreases of up to €30/ton, depending on the grade and starting level. Demand remains inconsistent across the region, while sellers are determined to preserve margins where possible.

Despite persistently tepid end-user activity, some players believe that PE prices may be nearing a bottom. Market sentiment has turned cautiously less bearish in recent weeks, supported by expectations that buyers could return for pre-buying by July, especially as price outlooks shift and agricultural demand picks up with the start of the high season.

Imports remain a key influence shaping these expectations. Traders report that import availability for June-July delivery is not significantly undercutting local prices. However, upcoming overseas arrivals—particularly from the US—are being closely watched. Freight rates are trending higher amid improved US-China trade relations, fueling speculation that long-haul costs for September-October delivery might increase. Some players believe that once the market finds its floor, PE could stage a gradual rebound between late August and September.

PE buyers also weigh replenishment at multi-month lows

Some PE grades, including LDPE and HDPE, posted strong decreases in May. Multi-month low levels, coupled with the expected June drops, may lure buyers back to replenish their stocks in the following weeks. Even so, summer holidays across Europe may curb trading activity, potentially delaying any meaningful recovery until late Q3.

Geopolitical developments, including the EU’s ongoing tariff considerations, continue to inject uncertainty. While concerns over potential trade disruptions persist, current expectations suggest that major US-origin PE grades may remain exempt, helping to sustain current trade flows and prevent abrupt supply shifts.

According to the latest update, Trump has postponed the implementation of the proposed 50% tariffs on EU goods to July 9. In response, the EU agreed to accelerate trade talks in an effort to ease tensions. All eyes are now on how developments on this front will unfold.

Outlook: Weakness persists for now, but sentiment gradually shifts

In both the PP and PE markets, the sentiment for June remains tilted toward softening. Yet, the intensity of downward pressure is expected to taper off compared to previous months. Market players are increasingly looking beyond June, anticipating a turning point around July or August as supply-demand dynamics begin to rebalance.

One key factor shaping this outlook is the rising cost of freight, which is expected to erode the competitiveness of fresh import cargoes scheduled to arrive in Q4. As a result, some buyers are considering early purchases to hedge against higher replacement costs in the coming months.

While a substantial recovery remains unlikely in the near term due to weak demand and the summer lull, conditions may gradually improve from Q3 onward—particularly if inventory levels tighten and restocking resumes at a measured pace. Barring any major geopolitical or macroeconomic disruptions, a more balanced market could emerge heading into the post-summer season, especially if energy and feedstock costs remain supportive.