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This week, PP spot prices decreased in the European region.
An industry source in Europe reported a Polymerupdate team member, "European polypropylene markets experienced a decline in spot prices due to weak demand, while contract prices remained stable. Market participants indicated that demand was lower than anticipated, which was the primary factor influencing the market during the first half of March. Converters reported a decrease in orders from the automotive and construction sectors, facing challenges in finding replacements. Contract prices held steady as buyers resisted sellers' attempts to raise prices for the month. The European polypropylene (PP) market entered March with a degree of uncertainty, as fluctuations in crude oil and foreign exchange markets led many buyers to adopt a cautious approach. Trading activity was relatively low as market participants awaited clearer pricing signals for the month and insights into the pricing trends for the second quarter.
The source added, “Sentiment in the market remains cautious, with both buyers and sellers focusing on inventory management amid a bleak macroeconomic outlook characterized by ongoing stagnation and recession fears. Additionally, the potential imposition of US tariffs on finished goods imports from Europe, particularly affecting the automotive sector, has further complicated the business environment. Despite the force majeure events, supply levels are generally healthy, with local producers believed to be aligning their output with demand to prevent market oversaturation in light of global overcapacity.”
According to market participants, the March monthly contract price (MCP) for feedstock propylene increased by Euro 7.50/ton, prompting many producers to pursue higher margins by aiming for more significant increases in PP prices. These price targets varied widely, typically ranging from Euro 10-30/ton. However, these targets were called into question as crude oil prices experienced a sharp decline, while the euro appreciated against the US dollar.
Both the automotive and construction sectors provided limited support for polypropylene spot prices in March, as market expectations fell short. Sellers were optimistic about a rise in demand prior to the expected slowdown in April, attributed to the approaching Easter holidays in Europe. However, this increase did not occur, and demand continued to be weak. Market participants expressed uncertainty regarding the factors contributing to the decline in demand during March. Additionally, the influx of competitively priced materials from Asia is anticipated to further weaken the demand for domestic products. Consequently, some sellers chose to reduce their prices in an attempt to attract buyers and converters, but this strategy yielded minimal results, as market activity remained subdued..
In March, a moderation in underlying demand was anticipated following a relatively robust performance in February. However, uncertainty persists regarding the impact of recent developments on March's demand. Some market participants speculate that demand may contract in March, particularly as buyers have largely fulfilled their stock replenishment needs, allowing them to postpone some procurement until April. This scenario could be especially relevant for spot volumes if sellers maintain their pricing in the upcoming weeks. Conversely, others believe that integrated producers might take advantage of lower naphtha prices to offer more competitive spot pricing for polypropylene (PP) volumes. Nonetheless, tight and relatively high-priced supplies of feedstock propylene may dissuade some producers from pursuing this strategy. Additionally, April typically experiences lower demand as many buyers shut down operations for the Easter holiday, which could further diminish purchasing interest, particularly if expectations of a downward price trend solidify.
Producers are aiming to capitalize on buyers' seasonal restocking needs, with the supply front primarily consisting of domestically sourced materials due to decreased imports from the Middle East and Asia in recent months. However, pricing dynamics may differ among sellers and specific grades. Some early PP contract settlements have been reported at rollover prices, while there are indications of some reductions being offered, especially where underlying contract prices remain elevated, though the overall significance of these offers is yet to be determined. Commodity-grade PP is likely to face increased pressure from a rise in imports from the Middle East in the second quarter and, to a lesser extent, in the latter half of March. The influx of lower-priced imports is expected to diminish the negotiating power of many European producers and their capacity to expand profit margins. There are forecasts suggesting that PP contract prices may avoid bearish pressure in March, as producers concentrate on protecting margins and aligning production rates with anticipated demand. Certain producers may encounter diminished inventory levels and restricted capacity in their order books.
FFew plant outages are still ongoing, including a force majeure affecting supply from a facility in France, reduced deliveries from a location in Belgium, and scheduled maintenance at a polypropylene plant in the United Kingdom. Additionally, another polypropylene plant in the Netherlands is set for maintenance in May. This week, a cracker in Belgium experienced an unplanned outage, and the operational status of downstream assets remains uncertain.
In the spot markets, PP injection moulding grade prices were assessed at the Euro 1185-1195/mt FD North West Europe mark, Meanwhile, PP block copolymer grade prices were assessed at the Euro 1235-1245/mt FD Northwest Europe levels, both falling by Euro (-10/mt) from week on week.
Meanwhile in the contract markets, PP injection moulding grade prices were assessed at the Euro 1550-1555/mt FD NWE Germany and FD NWE France levels, both unchanged from last week. PP injection moulding grade prices were assessed at the Euro 1540-1545/mt FD NWE Italy levels, stable week on week. Meanwhile, PP injection moulding grade prices were assessed at the GBP 1305-1310/mt FD NWE UK levels, a gain of GBP (+10/mt) from the previous week.
In the contract markets, PP block copolymer grade prices were assessed at the Euro 1620-1625/mt FD NWE Germany and FD NWE France levels, both left unchanged from week on week. PP block copolymer grade prices were assessed at the Euro 1610-1615/mt FD NWE Italy levels, steady from last week. Meanwhile, PP block copolymer grade prices were assessed at the GBP 1360-1365/mt FD NWE UK levels, a marginal week on week rise of GBP (+5/mt).
FCA Antwerp PP homopolymer prices were assessed at the Euro 1170-1200/mt level while FCA Antwerp PP copolymer prices were assessed at the Euro 1220-1250/mt levels, both lower by Euro (-10/mt) from the previous week.
Upstream propylene spot prices on Thursday were assessed at the Euro 1000-1010/mt FD Northwest Europe levels, a week on week decline of Euro (-25/mt).
European propylene contract price for March 2025 settled at the Euro 1135/MT FD North West Europe levels. This price represents an increase of Euro 7.50/mt from its February 2025 settlement levels.
