Oil Price Swings in Late July Fail to Halt Recovery Across Most Polymer Markets

Sharp fluctuations in crude oil prices during the second half of July tested polymer markets across the globe, but most regions managed to maintain their improving price trend. After Brent crude briefly crossed $100/barrel amid escalating geopolitical tensions in the Middle East, prices quickly fell back to the low-$80s before ending the month near $90/barrel.

Despite this rapid correction, polymer markets in Europe, Southeast Asia, Turkey, India, and Egypt largely retained their firm sentiment. China was the only major market where the decline in crude oil significantly weakened the recent cost-driven recovery.

Europe: Market Stabilizes as Sellers Hold Firm

Europe's polymer market continued to stabilize after months of price declines. Low-priced offers that had dominated earlier in the summer largely disappeared as producers became more confident, supported by firmer feedstock costs.

Although demand remains weak due to the summer holiday season, sellers maintained their pricing stance. The correction in crude oil slowed buying activity but did not trigger another round of aggressive price reductions. Market participants expect August prices to remain mostly stable, with the possibility of modest increases depending on feedstock settlements.

Southeast Asia: Buyers Turn Cautious While Sellers Stay Firm

Across Southeast Asia, fluctuating crude oil prices mainly affected buyer sentiment rather than seller pricing.

Many buyers limited purchases to immediate requirements as uncertainty over future price direction increased. However, suppliers largely maintained firm offers, supported by higher replacement costs and expectations that upstream markets could remain volatile.

As a result, trading activity slowed, but overall market sentiment remained positive.

China: Recovery Loses Momentum

China's polymer market experienced the strongest impact from crude oil volatility.

After recording a two-week recovery supported by higher feedstock costs and stronger futures, the market weakened as crude oil prices reversed. Softer futures and weaker domestic sentiment pressured PE, PP, and PVC prices, while seasonal demand remained sluggish.

Both buyers and sellers adopted a cautious approach as uncertainty in the energy market made pricing decisions more difficult.

Turkey: Tight Supply Keeps Market Supported

Turkey's polymer market remained relatively resilient despite the correction in crude oil.

Limited availability of PP and PE, along with expectations of higher replacement costs, continued to support prices. PVC, however, remained comparatively weaker due to comfortable supply and softer demand.

Market participants continue to expect firmer pricing in the coming months, with supply conditions playing a bigger role than short-term movements in crude oil.

India: Producer-Led Price Increases Continue

India's domestic polymer market maintained its upward trend despite softer crude oil prices.

Local producers continued implementing price increases across PE, PP, and PVC, supported by higher production costs. PVC received additional support from the implementation of the Minimum Import Price (MIP) policy.

However, comfortable inventories and ongoing imports kept buyer demand measured, making the recovery largely driven by producers rather than end-user consumption.

Egypt: Market Remains Firm

Egypt's polymer market also remained supported despite the volatility in crude oil.

Higher replacement costs and expectations of stronger August import offers helped sustain positive sentiment across PE, PP, and PVC markets. Nevertheless, weak demand and cautious buying continued to limit overall trading activity.

Regional Fundamentals Continue to Drive the Market

The sharp swings in crude oil during late July affected market sentiment differently across regions, but they did not reverse the improving trend seen in most polymer markets.

Europe, Southeast Asia, Turkey, India, and Egypt continued to benefit from tighter supply, higher replacement costs, and disciplined producer pricing. In contrast, China's market remained more sensitive to fluctuations in upstream costs due to weak underlying demand.

Overall, recent market developments suggest that while crude oil continues to influence short-term price movements, regional supply-demand fundamentals remain the key factor determining the direction of polymer markets.

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