European PP producers open August on a stable to softer note

In Europe, regional PP producers have largely opened the month with rollovers, defying the €10/ton lower propylene contract settled late last week. However, small decreases have also emerged amid weak market conditions, extending the downtrend stretching as far back as April. Buyers’ resistance given the summer lull as well as no projections for increases in the near and medium term has prompted some sellers to trim their initial offers.

Stagnant demand weighs on the market

Many buyers have already left their desks this week, while the majority will shut their factories soon. The summer lull has hindered buying appetite, as converters are not interested in building stocks ahead of extended closures. Accordingly, some sellers were forced to revise their initial rollover requests down to spur sales.

A distributor of a West European producer in Germany commented, “We started to offer our volumes with rollovers. However, we encountered resistance from buyers as they are not willing to pay stable prices. Hence, we are likely to concede to €10-20/ton reductions in the coming days.” Another seller, meanwhile, opened the month with €10/ton drops but does not exclude conceding to larger discounts as the month wears on.

Asian cargoes attract attention despite initial market signals in July

Although earlier in July, Asian PP prices were considered uncompetitive compared to local material, several converters ultimately opted to secure some cargoes from the region. These decisions were based on multi-month low price levels.

While our initial assessment did not fully capture the appeal of these offers, subsequent developments revealed that Asian sellers showed greater pricing flexibility, particularly toward the end of July. This shift enabled some buyers to procure PPBC cargoes below €1000/ton CIF, with delivery scheduled for October-November, amid reports of elevated supplier inventories.

In fact, the latest price levels were at €950/ton for PPH, €1000-1020/ton for PPBC, and €1050-1070/ton for PPRC, all on CIF basis, with delivery in October and November. These figures reflected sellers’ willingness to negotiate in a slow market environment and July purchases will curb buying interest in the upcoming months.

Increases are excluded for near-to-medium term

As for August, rollovers to small reductions are expected to remain in place in the PP market. The weak stance of demand in the midst of summer vacations and comfortable availability are likely to continue weighing on the market, pulling prices slightly down compared to July. In addition, further small price cuts are not excluded as the month wears on as sellers might be forced to concede to extra discounts in order to stir buying interest.

Market participants, meanwhile, started to share September expectations, which lean toward stability. While producers may try to seek increases amid their margin recovery targets, many players think that the PP market is not strong enough to support any firmer stance. Plus, following OPEC’s decision to boost oil production in September, crude oil prices might witness some reductions, putting further pressure on feedstock costs.

Players monitor long-term impact of US tariffs

Looking further ahead, many players exclude possible increases until the year-end amid typical destocking activity by November and December and no signs of improvement in demand on the horizon.

In addition, some buyers expressed their concerns regarding the non-binding US-EU agreement, which introduces 15% tariffs on most European goods, including automobiles, starting August 7. The European Commission’s decision to delay planned countermeasures is seen as a concession to the US, following weeks of negotiations. Meanwhile, the 50% tariffs on steel, aluminum, and copper-derived products remain intact.

A buyer commented, “We will have to pay a 50% duty on our copper-based goods exported to the US, and our demand is likely to face a huge fall in the coming months.” Another buyer in the pet cage manufacturing sector shared similar concerns, adding that they might face low export activity.