Geopolitical uncertainty shifts sentiment in Europe’s PE, PP markets ahead of August

After nearly two months of steady price declines caused by weak demand and ample supply, sentiment in Europe's polyethylene (PE) and polypropylene (PP) markets is beginning to improve. While overall market fundamentals remain unchanged, rising crude oil and feedstock prices following renewed geopolitical tensions in the Middle East have started to influence market expectations for the coming weeks.

Although July trading remains slow, the market is no longer focused solely on further price reductions. Instead, buyers and sellers are increasingly discussing where prices may stabilize. Higher production costs and uncertainty surrounding feedstock availability have encouraged some converters to seek September quotations earlier than usual, while suppliers are becoming less willing to offer deeper discounts.

PE market shows signs of improving confidence

The PE market remained under pressure during the past week as suppliers continued offering discounts to stimulate demand before the summer holiday season. Most converters limited purchases to immediate production requirements while relying on existing inventories.

Despite these weak fundamentals, market sentiment has improved. Several suppliers have reported higher inquiry levels for September deliveries, and some producers have temporarily suspended fresh offers while reviewing pricing in response to rising production costs.

The recent increase in crude oil and feedstock values has also encouraged some buyers to secure part of their future requirements earlier, fearing replacement costs could rise further. Although overall demand remains soft, buying decisions are gradually shifting from waiting for lower prices to managing future cost risks.

PP market moves closer to a price floor

The PP market also continued to experience pricing pressure, with suppliers offering additional discounts to generate sales amid sluggish downstream demand and sufficient material availability. Buyers largely maintained a hand-to-mouth purchasing strategy, supported by comfortable inventories and limited end-user orders.

At the same time, Asian import offers have remained less competitive due to higher freight costs and longer delivery times, providing little additional pressure on European suppliers.

However, many market participants now believe the prolonged correction may be approaching its end. Higher feedstock costs and the possibility of lower operating rates at European production plants after the summer holidays are expected to provide stronger price support. As a result, expectations for August have become more balanced, with stabilization now viewed as more likely than another significant decline.

Higher production costs reshape August outlook

Although demand across Europe's polymer markets remains weak and inventories continue to be comfortable, the rise in energy and feedstock costs has changed the overall market outlook.

If crude oil and feedstock prices remain elevated, European producers reduce operating rates, and import pressure from Asia stays limited, the extended downward trend could gradually lose momentum. Even though stronger end-user demand is still required for a sustained recovery, current conditions increasingly point toward market stabilization rather than another round of aggressive price cuts.

Current Market Levels vs Pre-War Prices

HDPE Film – Italy
Current Level: +13% above pre-war price

HDPE Film – Northwest Europe
Current Level: +16% above pre-war price

LDPE Film – Italy
Current Level: +5% above pre-war price

LDPE Film – Northwest Europe
Current Level: +13% above pre-war price

LLDPE C4 Film – Italy
Current Level: +19% above pre-war price

LLDPE C4 Film – Northwest Europe
Current Level: +22% above pre-war price

PPH Injection – Italy
Current Level: +27% above pre-war price

PPH Injection – Northwest Europe
Current Level: +25% above pre-war price

PPBC Injection – Italy
Current Level: +26% above pre-war price

PPBC Injection – Northwest Europe
Current Level: +24% above pre-war price

Despite the significant correction seen over recent months, European PE and PP prices continue to trade above their pre-war levels. PP grades still retain a larger premium than PE, highlighting the stronger influence of production costs even as downstream demand remains subdued.

Stay ahead of market trends with the Credco app. For any queries, please reach out via WhatsApp at +91 8448083211.