European PE downtrend accelerates as pricing power shifts

The downward correction in Europe’s PE market gathered further momentum in July, with prices posting another round of three-digit declines. Although crude oil remains volatile amid developments in the Middle East, market participants increasingly agree that supply-demand fundamentals have reclaimed the driver’s seat, leaving little room for geopolitical headlines to support polymer prices.

According to weekly average data from the ChemOrbis Price Index, European PE prices have already erased a substantial portion of the extraordinary rally triggered by the Middle East conflict earlier this year. Across the main PE film grades in Italy and Northwest Europe, prices have surrendered a large share of their gains from late February to the early May peak, bringing several benchmarks close to their pre-war levels.

Buyers stay in control as corrections deepen

Regional producers applied July reductions largely in line with or exceeding the €200/ton decline in the monthly ethylene contract. Several suppliers launched contract discussions with decreases of around €300/ton while leaving room for further revisions on spot business should buying interest remain subdued. Import offers also moved sharply lower, with traders reporting monthly declines of around €200-250/ton for both US and Asian origins amid comfortable availability and intensifying competition.

Despite the sizeable corrections, buyers showed little urgency to return to the market. Comfortable inventories, sluggish end-product demand and the approaching summer shutdowns continued to encourage hand-to-mouth purchasing, with most converters securing only limited volumes to cover immediate or post-holiday requirements. Several players noted that suppliers have revised price lists multiple times within a single week in an effort to stimulate demand, while overall material availability remained sufficient despite isolated supply constraints for certain grades.

Duty-free US PE gradually adds to import pressure

Another factor reinforcing the bearish outlook is the implementation of the EU-US tariff agreement, which removed the EU’s 6.5% import duty on US-origin Chapter 39 products under Regulation (EU) 2026/1455.

Although the regulation has legally applied since July 1, its commercial impact is expected to emerge gradually. While traders continue selling inventories that had already been released for free circulation before July and therefore incurred the previous duty, cargoes arriving from July onward may already qualify for duty-free treatment provided they meet the applicable origin and direct-transport requirements. As a result, players expect competitive pressure from US PE to build progressively as more zero-duty cargoes enter the market and existing duty-paid inventories are gradually depleted. Meanwhile, increasingly aggressive US offers, supported by ample domestic availability and suppliers’ efforts to move volumes, are already adding to downward pressure on European prices.

Summer slowdown clouds near-term outlook

Market participants largely expect the current correction to continue through the remainder of the summer. Buyers remain convinced that prices have yet to establish a floor, while sellers continue competing aggressively for limited demand. Unless renewed Middle Eastern tensions evolve into prolonged disruptions to regional exports, supply-demand fundamentals are expected to remain firmly in control. Weak seasonal demand, comfortable inventories and intensifying import competition are therefore likely to keep the European PE market under pressure in the coming weeks.