European PE market faces uncertainty amid US-EU tariffs and weak demand

The European PE market had a strong start to the first quarter of 2025, driven by producers’ margin enhancement targets and reduced import supply. However, the landscape has quickly become more complex, as multiple factors, including the potential for EU’s retaliatory tariffs, lower costs and lethargic demand, have created an uncertain market environment.

The European market has found itself in a delicate situation, with the lower April ethylene settlement, hesitant demand, challenges related to Trump’s tariffs, and a potential shift in dynamics. While the €55/ton lower ethylene settlement put a downward pressure on PE prices, the rumor has it that a few sellers sought increases of up to €50-100/ton, assuming that reciprocal tariffs will cut the US PE flow to the bloc.

The market focus has shifted towards US President Donald Trump’s announcement of new reciprocal tariffs on April 2, 2025. These measures aim to address the US trade deficit by imposing tariffs equivalent to those charged by trading partners. In response, the European Union has expressed a desire for reconciliation but has also prepared countermeasures to protect its economic interests if necessary.

Worries over US duties and increased import costs

One of the primary concerns in the European PE market is the looming risk of US duties. The ongoing trade tensions between the US and Europe may increase import costs, which may provide European producers with the leverage to raise their prompt offers.

A source from a major producer commented on the issue and said, “Import cargos bought in February are on the water and if potential duties of 25% are applied upon arrival, this could shift the market in April. The European market may see a temporary boost, particularly for prompt materials. However, the sustainability of this remains uncertain. Much will depend on US suppliers’ future strategies. If they reduce prices to stay competitive, the planned price hikes by European suppliers could become unfeasible.”

A trader also noted, “We would continue to import US material, which could remain more competitively priced than European offers, especially if European producers raise prices in anticipation of tariffs.”

If US suppliers opt to maintain their offers and remain competitive, more material is expected to come from the Far East and the Middle East in the long term. This represents a dual challenge for European producers: facing high import volumes while also dealing with the potential for higher duties on US materials entering the EU. These further obscure the long-term outlook.

Long-term impacts of EU’s tariffs on US polymers

Around mid-March, Plastics Europe, a leading European trade association, warned that the introduction of tariffs, especially on industrial goods like plastics, would disrupt supply chains, increase costs for businesses, and hurt consumers on both sides of the Atlantic. The US is a vital trade partner for Europe’s plastics sector, with €3.4 billion in exports and €5.3 billion in imports of plastics in 2023.

The European Plastics Converters Association (EuPC) has also voiced their concerns recently regarding the European Commission’s proposed tariffs on plastic polymer imports from the US, saying that they might threaten Europe’s plastics converting industry and the 1.6 million jobs it supports, on top of paving the way for price increases, less competitiveness, and job losses in the EU, jeopardizing both industrial and environmental goals.

A market in limbo: Are hike requests justified for April?

A few key suppliers are reportedly adjusting their strategies to maintain profitability, citing the possibility of tariffs, although this has not been officially confirmed yet. This price increase is part of a broader effort to recoup margins and adjust for potential disruptions in the supply chain.

On the other hand, some traders were seen offering rollovers to some decreases following lower ethylene settlement. They have shared their opinions to close LDPE deals with rollovers given limited supplies, while decreases of up to €50/ton may be seen for other grades by the end of April. Meanwhile, a buyer reported to have been offered European LDPE with €25-30/ton decreases in the spot market.

As a result, it remains uncertain whether the firmer pricing policies from producers will be widely adopted in a market writhing in limbo, or if rollovers and discounts will be the most probable outcome during April.

Market activity stalls on confusion, upcoming festivities

Buyers have been already hesitant to purchase material in large quantities, awaiting further decreases in prices before committing to new orders. This cautious stance from buyers has contributed to the overall stagnation in the market. The battered buyer behavior is further exacerbated by the uncertainty surrounding future price movements and the looming threat of US tariffs.

April will be a short month in terms of working days given Easter and bank holidays, with some processors considering bridging the holidays amid slow order entries. This “wait-and-see” approach is contributing to the overall lack of momentum in the market.

It seems likely that further price adjustments will occur as the month progresses, as producers and traders adapt to the shifting market dynamics. Buyers, meanwhile, will continue to monitor the situation closely, balancing the risk of price increases with the potential for better deals down the road amid already fragile demand.