European PP Prices Continue to Slide as Weak Demand Dominates

The European polypropylene (PP) market remained under pressure in early July, with prices extending their downward trend as suppliers introduced reductions well beyond the decline in July propylene costs. Although sellers offered substantial discounts to stimulate demand, buying activity remained subdued, with most converters continuing to purchase only for immediate production requirements while anticipating additional price corrections.

Across Italy and Northwest Europe, producers and distributors repeatedly adjusted their July offers lower as the market weakened. Depending on the supplier and previous purchase levels, price reductions commonly exceeded €300/ton, while some distributors lowered offers by nearly €400/ton to remain competitive.

Market participants reported that several suppliers revised their initial July quotations shortly after release in an effort to generate sales. At the same time, more PP homopolymer transactions were heard around €1200/ton FD, strengthening expectations that the market has not yet reached its lowest point.

Lower Prices Fail to Improve Buying Interest

Despite aggressive price reductions, demand remained weak throughout the market. Most converters limited purchases to short-term production needs, while others continued delaying procurement after making only limited purchases during May and June.

According to market participants, sluggish end-user demand has become the main challenge rather than pricing. Many processors are still consuming higher-priced inventories purchased during the spring rally, while only buyers with urgent requirements are actively entering the market. Seasonal summer holidays across Europe are also expected to further reduce trading activity during July and August.

Supply-Demand Balance Drives the Market

Although the sharp fall in the July propylene settlement eased production costs, participants agreed that market fundamentals are currently having a much greater influence on pricing.

Comfortable inventory levels, sufficient product availability, and weak downstream demand continue to place pressure on prices beyond what feedstock costs alone would justify. Import activity has also remained limited, with overseas offers attracting little interest as buyers expect further corrections in the domestic market.

While prices have declined significantly in recent weeks, many buyers believe European PP values still remain above pre-conflict levels, encouraging continued hand-to-mouth purchasing.

Conflict-Driven Gains Continue to Fade

The recent correction has erased a significant portion of the sharp rally that followed the Middle East conflict earlier this year. Between late February and early May, European PP prices surged dramatically before entering a prolonged correction.

Italy – PPBC Injection

Increase from Pre-War to Peak: ▲ 115%
Peak Reached: Early May
Correction from Peak: ▼ 40%
Current vs Pre-War Level: ▲ 30%

Northwest Europe – PPBC Injection

Increase from Pre-War to Peak: ▲ 99%
Peak Reached: Early May
Correction from Peak: ▼ 38%
Current vs Pre-War Level: ▲ 24%

Italy – PP Homopolymer Injection

Increase from Pre-War to Peak: ▲ 115%
Peak Reached: Early May
Correction from Peak: ▼ 39%
Current vs Pre-War Level: ▲ 30%

Northwest Europe – PP Homopolymer Injection

Increase from Pre-War to Peak: ▲ 101%
Peak Reached: Early May
Correction from Peak: ▼ 38%
Current vs Pre-War Level: ▲ 25%

Italy – PPRC Injection

Increase from Pre-War to Peak: ▲ 112%
Peak Reached: Early May
Correction from Peak: ▼ 40%
Current vs Pre-War Level: ▲ 28%

Northwest Europe – PPRC Injection

Increase from Pre-War to Peak: ▲ 101%
Peak Reached: Early May
Correction from Peak: ▼ 39%
Current vs Pre-War Level: ▲ 23%

Although a large portion of the earlier rally has been reversed, European PP prices continue to trade 23-30% above pre-war levels, indicating that part of the geopolitical premium remains in the market.

Higher Oil Prices Have Limited Impact

The recent recovery in crude oil prices, supported by renewed geopolitical tensions in the Middle East, has done little to improve market sentiment. Most participants believe stronger energy prices alone are unlikely to reverse the current downtrend unless supply disruptions become prolonged and significantly affect regional exports.

Outlook

Market participants generally expect further downward price adjustments during the second half of July. Comfortable inventories, weak downstream demand, and the seasonal slowdown are likely to keep sellers under pressure. Unless demand improves meaningfully or supply tightens, buyers are expected to continue purchasing only for immediate requirements while waiting for lower prices.

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