European PE players eye stability to slight rebound later in Q3

PE deals have been closed with rollovers to small downward variations in the second half of the month due to weak demand and more than comfortable availability. As the month draws to a close, players have shifted their attention to August and September, with expectations leaning towards a stable to slightly firmer trend.

Demand remains stagnant in July

Suppliers continued to express concerns over sluggish market activity, as converters limited their purchases due to high stock levels and weak demand for end products. Furthermore, a significant number of buyers are currently on summer vacations across Northern Europe, which further dampened purchasing enthusiasm.

Yet, interest in forward deliveries improves

However, some traders in Italy noticed improved demand for September material, as some buyers started to order material for the post-summer period. A trader selling US volumes commented, “We received many orders from converters who secured some cargoes at current price levels for delivery in September. We think that the market is not expected to see further drops, while regional producers might try some increases in September.”

Meanwhile, some buyers opted to secure import cargos scheduled for September arrival considering their competitiveness. Specifically, LLDPE from the Middle East was purchased at €980/ton DDP, reflecting a modest increase of €20/ton compared to June. A packager based in Switzerland anticipates that PE prices will largely remain stable for the remainder of the month, while he highlighted that the medium-term outlook remains uncertain due to potential tariffs on US PE and the evolving geopolitical climate.

Has the PE market hit the bottom?

Players shared their expectations for August and September on a stable to firmer note as they mainly think that the bottom has been reached in the PE market. With demand expected to remain muted amid the summer holiday pause, the PE market is expected to remain on a stable note. Plus, the next ethylene contract, for which projections indicate rollovers or only minor variations, is likely to keep the market mainly unchanged. However, small downward variations are not excluded either in a few cases, especially if traders or distributors aim to lower their stocks in the midst of August closures.

Sellers hopeful about September

When it comes to September, market participants mostly agree on the fact that regional producers might try to increase their prices in an attempt to boost their margins. However, the state of demand is likely to take central stage in setting the direction of the market. Converters who purchased material for September delivery are expected to remain sidelined amid high stocks, potentially hindering market activity. Consequently, initial hike attempts may be unsuccessful, and rollovers might dominate the month.

Nevertheless, some traders noted that new shipments from the US due to arrive in September have emerged with price hikes, indicating stronger export targets from US suppliers. This might provide regional producers with some leverage to avoid further reductions in the upcoming months.