The European PP and PE markets are back after a long holiday with a rapid upward trend.

1. PP and PE Markets Extend Mild Gains into a Second Month

The PP and PE markets have extended their modest upward trend into a second month, as regional polyolefin players gradually return to work after the extended holiday period this week. The typical summer lull has been overshadowed by constrained import flows and regional disruptions, paving the way for price increases during the slowest trading month of the year.

2. Price Increases Align with August Monomer Settlements

European market participants have experienced reduced import flows amid production disruptions and logistical bottlenecks, supporting the sentiment of domestic suppliers. Both PP and PE markets posted slight gains, reflecting mildly tightened supply, with August deals concluded at around €20/ton higher than the previous month in the contract market.

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Buyers largely stayed away from the spot market, having secured some purchases in advance during July. Meanwhile, weak downstream demand and efforts to secure year-end bonuses led to a stronger focus on contract markets.

However, suppliers had to step back from their initial price hike targets of up to €50/ton due to sluggish trading activity. They were unable to fully restore margins, despite achieving more stable sales amid reduced imports. A regional supplier commented:

“We initially tried to push for €50/ton increases, then reduced to €20/ton in line with monomer settlements. Still, demand in August has been better than in previous years. The lack of alternatives has supported demand for European material.”

3. Several PP Producers Under Force Majeure

In addition to disrupted imports, ongoing and renewed production issues across the region have constrained overall PP supply. Planned and unplanned shutdowns have further reinforced disciplined operating rate cuts. Force majeure situations affecting PP output from Total, Ineos, SABIC, and Exxon continued into mid-August. Meanwhile, Borealis declared force majeure on PP supplies from Kallo, Belgium, due to technical issues in late July.

This has clearly supported domestic producers, with PP grades slightly tighter than PE.

4. Hurricane Season Limits US PE Imports

PE shipments from the United States—so far the largest PE supplier to the EU27—have been disrupted due to production issues and the hurricane season. Some PE grades have tightened as US producers reportedly built inventories to mitigate potential production disruptions.

Limited US volumes have helped eliminate low-price levels, with many buyers relying on domestic purchases to meet their needs. Allocations from South Korea and the Middle East have also remained restricted.

In Europe, ExxonMobil’s force majeure on LLDPE production in France has remained in effect since late May. Additionally, scheduled maintenance shutdowns are expected from September to October.

5. Supply Outlook Remains Tight Amid Plant Closures

The regional supply outlook shows no signs of easing amid broader restructuring plans aimed at phasing out Europe’s aging petrochemical plants. European producers are conducting strategic reviews to improve profitability in the face of cost pressures, weak demand, and evolving regulations, as companies continue to report declining margins.

While more plant closures are expected, the transportation crisis has only delayed or softened the rationalization process. ExxonMobil will shut down its Gravenchon cracker and PP/PE plants by the end of 2024, while downsizing its LDPE facility in Belgium early next year. LyondellBasell has also recently outlined plans to reassess its European assets.

6. What Lies Ahead in September?

European PP and PE markets have returned with a cautiously upward trend after the summer holidays. The modest price increases reflect current supply-demand fundamentals, while expectations for September rule out any significant price surges.

Monomer forecasts remain mixed, given volatile oil prices and recent gains in spot propylene and ethylene markets. However, major suppliers are expected to approach the market with price increase attempts to recover margins, supported by somewhat tighter supply due to inland transport issues and maritime logistics disruptions.

Freight rates are expected to remain elevated until early 2025 after peaking in mid-July, while market participants in southern regions continue to struggle with disrupted deliveries from Northwest Europe.

Suppliers are also pinning hopes on the traditional demand recovery in September. However, it remains too early to determine whether price increases will materialize, as post-summer restocking activity will be the key deciding factor.

On the other hand, some market players remain cautious, closely monitoring developments in the import market. If import flows resume amid lower freight rates and recovering production, this could put pressure on regional producers’ price hike efforts. As one participant noted:

“European converters have become less conservative when sourcing from import markets.”