Firmer cost outlook lifts February expectations in Europe’s PE markets

European PE markets are closing January on a stable to slightly firmer note, marking a second consecutive month of departure from the eight-month downturn that had driven prices to multi-year lows. Players are increasingly shifting their focus to February, underpinned by firmer expectations stemming from higher costs and renewed producers’ margin recovery efforts.

While demand remains calm, the prevailing sentiment suggests that this upward momentum could extend into next month, albeit in a cautious manner.

Producers manage to recover margins

January pricing discussions were mostly concluded with rollovers to gains, allowing producers to partially restore margins. LDPE and MDPE deals were settled with increases of €30-50/ton, while HDPE and LLDPE saw rollovers to modest gains of €20-30/ton.

Despite these increases, buying interest remained subdued overall, reflecting seasonally slow demand and the impact of pre-buying carried out in December. Still, some distributors reported a slight uptick in inquiries recently, as buyers began searching for material ahead of potential February hikes.

Feb expectations firm on costs, supply constraints

Looking ahead, many producers are broadly aligned in their February expectations, with possible increases of around €30-50/ton being targeted. These ambitions are largely driven by the awaited firmer ethylene contract, which is expected to rise by around €20/ton, alongside ongoing efforts to further improve margins.

In Europe, spot ethylene prices surged amid tightening market conditions, driven by aggressive inventory reductions in December and accelerating restocking activity. Limited spot availability has narrowed discounts to contract levels, lifting spot prices to their highest since late August 2025, with prices standing at €700/ton FD NWE. The upcoming European cracker turnaround season is also adding to supply-side concerns.

Tight availability for certain grades, particularly LDPE and MDPE, continues to support sellers’ firmer stance.

A distributor selling European and locally-held US material commented, “Producers intend to apply increases of around €30-50/ton to their PE prices next month. This is due to the awaited firmer ethylene outcome and tight supply for certain grades.” However, he added that the final outcome will depend on how demand evolves. Indeed, some sellers do not rule out rollovers should buying interest fail to gain traction.

Converters, meanwhile, shared expectations of potential increases linked to cost pressure and margin recovery attempts. One buyer expects average LDPE prices to stabilize at around €1200-1250/ton FD over the coming year after a prolonged period of declines, signaling projections of a more balanced market environment.

Imports offer partial relief but remain under watch

In the import market, some buyers opted to secure volumes at relatively more competitive levels ahead of anticipated local price increases. US LDPE was reported at around €1020/ton DDP, while Asian LLDPE offers stood near €870/ton DDP for February delivery. HDPE film from Uzbekistan was at €890/ton on the same terms.

However, slightly firmer import offers—with traders confirming small hikes for fresh shipments— are also expected to limit pressure on local prices moving into February.

Cautious optimism hinges on demand

PE prices are expected to hover around current levels for the remainder of January, before sellers test another round of increases in February. The combination of a potentially firmer ethylene contract, producers’ margin recovery targets, and selective supply tightness may pave the way for modest gains rather than aggressive hikes.

Nevertheless, players broadly agree that demand conditions will be decisive in determining whether February producers’ ambitions can be fully realized or ultimately revised into rollovers.