Monomer markets move closer to late-February levels as war-driven premiums evaporate

The sharp rally that swept through global petrochemical markets following the outbreak of war in late February is rapidly fading. As expectations grow that the ceasefire will hold and energy markets continue to normalize, monomer prices across Asia, Europe and the United States have extended their downward correction, erasing much of the war-driven premium accumulated during March and April.

The speed of the correction varies considerably by product and region. Some markets have already returned to pre-war levels, while others still retain a portion of their earlier gains. Nevertheless, the broader trend is increasingly clear: the geopolitical risk premium that once dominated petrochemical pricing is steadily disappearing.

Styrene leads the reversal: Prices back to pre-war levels

Among the major monomers, styrene has shown one of the most complete reversals. Prices in both Europe and the United States have already returned to levels seen before the conflict-driven rally, effectively wiping out all war-related gains.

Asia has followed a similar direction, although regional prices still maintain a modest premium compared to late-February levels. Falling benzene costs, softer crude values and persistently weak downstream demand have accelerated the correction, allowing styrene to emerge as one of the clearest examples of how quickly geopolitical premiums can unwind once supply concerns ease.

Europe’s olefins move close to pre-conflict territory

Ethylene and propylene in Europe have also undergone dramatic corrections. Both products experienced some of the strongest rallies during the height of supply disruption fears, but most of those gains have now disappeared.

The combination of cracker restarts, comfortable inventories, weaker feedstock costs and sluggish derivative demand has pushed European olefins back toward pre-conflict territory. While prices still retain a small residual premium, the market increasingly reflects underlying supply-demand fundamentals rather than geopolitical concerns.

The pace of the decline highlights how rapidly sentiment has shifted since April, when fears surrounding feedstock availability and regional supply disruptions pushed prices to unprecedented highs.

Asia retains the largest remaining premium

Compared with Europe and the United States, Asian markets continue to hold the largest residual conflict premium.

Ethylene remains the strongest performer among the four monomers covered in this analysis, retaining a notable premium over pre-conflict levels despite a prolonged correction. Propylene and VCM also remain elevated compared with late-February levels, suggesting that Asian markets have been slower to fully unwind the earlier rally.

Part of this resilience reflects regional supply dynamics and the fact that Asian olefin markets reacted more aggressively during the initial phase of the conflict. Even so, the direction remains firmly downward, with prices continuing to retreat as crude oil, naphtha and downstream polymer markets weaken.

US markets follow the same path

US monomer markets have largely mirrored developments elsewhere, although the magnitude of corrections has varied by product.

Styrene has already returned to pre-conflict levels, while propylene, VCM and ethylene still retain relatively modest premiums. Weak spot demand, softer energy values and improving supply availability have all contributed to the ongoing correction.

The remaining premiums in the US market now appear increasingly vulnerable should energy markets remain weak and global supply chains continue to normalize.

Focus shifts from geopolitics back to fundamentals

The broader message across monomer markets is that pricing is becoming increasingly detached from the geopolitical shock that triggered the rally earlier this year.

For much of March and April, fears surrounding feedstock availability, logistics disruptions and escalating regional tensions drove prices sharply higher. Today, those concerns are being replaced by more familiar market drivers such as demand weakness, inventory levels, operating rates and downstream profitability.

With several products already back to pre-conflict levels and others retaining only a fraction of their earlier gains, market participants are increasingly debating not how much conflict premium remains, but how long the remaining premium can survive if ceasefire expectations continue to strengthen.

For now, the correction appears far from over. While the pace may differ across products and regions, the trend remains consistent: war-driven premiums are disappearing, and monomer markets are steadily moving back toward fundamentals.