European PE Prices Extend Decline as Weak Demand Keeps Market Under Pressure

The European polyethylene (PE) market continued its downward trend in July, with prices recording another round of significant declines across major grades. Although crude oil prices remain volatile due to ongoing developments in the Middle East, market participants believe that supply-demand fundamentals have once again become the primary factor influencing prices, reducing the impact of geopolitical developments on the polymer market.

A large portion of the strong rally witnessed between late February and early May has now been reversed. Across Italy and Northwest Europe, prices for key PE film grades have fallen sharply from their peaks, with several grades now trading close to their pre-conflict levels.

Italy – HDPE Film

Increase from Pre-War to Peak: ▲ 101%
Peak Reached: Early May
Correction from Peak: ▼ 43%
Current vs Pre-War Level: ▲ 15%

Northwest Europe – HDPE Film

Increase from Pre-War to Peak: ▲ 105%
Peak Reached: Early May
Correction from Peak: ▼ 40%
Current vs Pre-War Level: ▲ 24%

Italy – LDPE Film

Increase from Pre-War to Peak: ▲ 110%
Peak Reached: Early May
Correction from Peak: ▼ 48%
Current vs Pre-War Level: ▲ 8%

Northwest Europe – LDPE Film

Increase from Pre-War to Peak: ▲ 113%
Peak Reached: Early May
Correction from Peak: ▼ 45%
Current vs Pre-War Level: ▲ 17%

Italy – LLDPE C4 Film

Increase from Pre-War to Peak: ▲ 104%
Peak Reached: Early May
Correction from Peak: ▼ 38%
Current vs Pre-War Level: ▲ 26%

Northwest Europe – LLDPE C4 Film

Increase from Pre-War to Peak: ▲ 106%
Peak Reached: Early May
Correction from Peak: ▼ 40%
Current vs Pre-War Level: ▲ 24%

Buyers Continue to Hold the Advantage

European producers introduced July price reductions largely in line with, and in many cases exceeding, the €200/ton decrease in the monthly ethylene settlement. Several suppliers began contract negotiations with reductions of around €300/ton, while remaining open to further discounts in the spot market if demand failed to improve.

Import offers from both the US and Asia also moved lower, with prices declining by approximately €200-250/ton amid ample product availability and increasing competition.

Despite these sizeable reductions, buying activity remained weak. Most converters continued purchasing only limited quantities to meet immediate production needs or post-holiday requirements. Comfortable inventory levels, slow downstream demand, and the approaching summer shutdown period have encouraged buyers to maintain a hand-to-mouth purchasing strategy.

Market participants also reported that some suppliers revised their offers multiple times within the same week in an effort to generate additional sales, while overall product availability remained sufficient despite isolated supply constraints for certain grades.

Duty-Free US Imports Increase Competitive Pressure

Another factor weighing on the European PE market is the implementation of the new EU-US tariff agreement, which removed the 6.5% import duty on qualifying US-origin Chapter 39 products from July 1.

Although the commercial impact is expected to emerge gradually, new cargoes entering Europe under the revised rules are likely to become increasingly competitive. Existing inventories imported under the previous duty structure are still being sold, but as more duty-free US material enters the market, competition is expected to intensify further.

Combined with ample availability in the US and aggressive export pricing, the arrival of additional duty-free cargoes is expected to maintain downward pressure on European PE prices.

Outlook

Market participants generally expect the current correction to continue through the remainder of the summer. Buyers believe prices have not yet reached their lowest levels, while sellers remain under pressure to compete for limited demand.

Unless geopolitical tensions in the Middle East develop into prolonged disruptions affecting regional exports, supply-demand fundamentals are expected to remain the dominant market driver. Weak seasonal demand, comfortable inventories, and growing import competition are therefore likely to keep the European PE market under pressure in the coming weeks.

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