Price slump deepens beyond feedstock fall / Weak demand, high stocks drive extra cuts / Mid-month oil volatility halts decline, triggers supply restraint / August outlook split as producers test hikes against sluggish buying

PE: The slump in European PE prices gained further momentum in July. The EUR 200/t decline in the ethylene contract alone triggered significant price cuts. The downtrend in quotations extended much farther than the ethylene slump, however. This was primarily due to the previous strong rise in prices alongside a weak demand situation and high stock levels. In mid-month, tensions in the Middle East flared up again, triggering a fresh round of volatility on the oil market. Some producers then closed their order books and even retracted some offers on the market. Evidently, the plan is to raise prices again in August. As demand is still very weak, however, it remains to be seen whether the anticipated minor rise in the ethylene contract can be priced into the polyethylene market.  The latest development has in the meantime halted the downtrend.

PP: During July talks, producers and processors agreed to significantly bring down the extremely high price levels. The reduction of EUR 190/t for propylene was merely an initial indication; decreases for polymers ultimately exceeded this by a considerable margin. The output of compounding plants has been sufficient to meet demand, and continues to do so, despite significant cutbacks. Products from East Asia and the Middle East – and, for the first time, some from the US – add to the available supply. During the coming weeks of the summer holidays, the ordering situation in the end-user markets is set to remain at a very low level. Orders from processors are therefore likely to be correspondingly small. As a result, some companies are opting to close down for several weeks. Only minor shifts in prices are expected in August. While the somewhat higher price of naphtha could cause the propylene contract to trend slightly higher, this is unlikely to have much of an impact on polymers. The reason lies in the low level of consumer demand due to prices that remain high, coupled with full warehouses. In this complex situation, even further significant price cuts would not lead to a rise in purchasing.

PVC: The sharp EUR 200/t drop in the ethylene contract kept PVC prices plummeting. After the massive increases seen in previous months, converters took advantage of the lower feedstock costs and weak demand in July to obtain further concessions. Producers had little to counter this with. Despite the curtailed output, the market remained adequately supplied, while Asian imports simultaneously attained new highs. Market participants also reported a surprisingly high degree of price flexibility on the part of a number of producers. As a result, domestic spot quotations fell below the price level of competing products from Asia. August is set to offer only limited scope for movement. While the ethylene contract is expected to roll over or undergo a moderate increase, seasonally weak demand during the main holiday month is likely to make it difficult for producers to pass on even just part of their higher costs to the market. They will no doubt also find it hard to make further price concessions, since energy costs have also risen noticeably of late, exerting pressure on margins again after only a brief respite.

Styrenics: As expected, prices in July 2026 plummeted following the temporary thaw in relations between the US and Iran that initially caused a slump in oil prices. In the wake of crude oil, naphtha, and benzene, the styrene reference contract dropped by EUR 270/t, dragging down prices for polystyrene, EPS, and ABS with it. For all materials, however, the extent of the cost reduction – for ABS, this included butadiene (down EUR 200/t) and ACN (down EUR 204/t) – represented only the lower limit for the price reductions. The particularly weak demand typical for the holiday season often exacted discounts that exceeded the cost change alone. The situation has since reversed, however. The renewed escalation of the Middle East conflict pushed oil prices back up. In the course of July, styrene spot prices also trended up. Several processors therefore worried about increasing prices for PS, EPS, and ABS in August, and sought to secure additional volumes, only to encounter supply restrictions from producers. Those affected speculated that these were attributable not only to low water levels on the Rhine and other rivers, but also to producers’ expectations of higher selling prices in August. Styrenics prices certainly seem likely to rise after the styrene reference rebounded by EUR 149/t for August. The market is therefore facing the unfavourable combination of already high prices, further increases, and extremely weak demand, which is likely to weaken further at the height of the holiday season compared with July.

PET: The resumption of hostilities between the US and Iran changed conditions on the European PET market again in July. Significant concessions seen at the start of the month were scaled back to moderate levels after the ceasefire broke down. However, converters’ inventories remained sufficiently well-stocked as demand from end markets stayed weak despite the heatwave. Concerns were focused chiefly on logistical uncertainties. Despite nominally favourable offers, buyers turned their backs on East Asian goods, turning instead to European product. On balance, local volumes were more than sufficient to meet demand. Order activity is likely to remain subdued in August as well. Few changes are expected on the supply side.

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