European PE and PP buyers pause following upstream drop

LONDON (ICIS)–The European polyethylene (PE) and polypropylene (PP) market has slowed down slightly this week, after a stronger start to March.

Contract discussions are ongoing, with sellers initially pushing for monomer and beyond, results are varied by grade, and this is largely connected to supply levels.

Not all discussions have begun but it is not expected that the drop in crude and naphtha will have an effect this month as it is now too late to impact downstream prices.

The drop in crude prices, as a result of the state of the banking sector, has caused PE players to pause.

Earlier March expectations were for stability in the monomer in April but now there is possibility of a similar drop to the one seen in naphtha in this week. As such, buyers are minded to hold their position on any extra purchases.

Demand is still below the average for this time of year, although it has improved month to month. More pressure has been applied to linear low density polyethylene (LLDPE) due to supply constraints.

PE imports remain limited in fresh offers, but some material was made available this week – possibly as a response to the drop in crude and naphtha. Traders could now expect that polymer prices to fall in April, so they consider now the best time to sell.

Talk of unconfirmed PP production issues in Europe, combined with turnarounds in the Middle East, has put pressure on availability.

While there are some shortages, there is not any significant tightness yet due to weak demand.

However, some players expect healthier demand in April for some sectors like construction.

The automotive sector, however, saw a boost earlier in the year, but some players see signs that this industry is starting to weaken heading towards April.

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