Demand weakens, supply improves / June outlook turns bearish as feedstock costs ease, imports return / Converters destock as summer lull sets in across PE, PP, PVC, styrenics, and PET

PE: Price agreements concluded in May varied considerably. Where producers had already applied significant increases in the last two months, they were now prepared to grant their customers a rollover. Other agreements followed the development of ethylene (up EUR 100/t) and factored in the cost increases. Despite continuing production cutbacks, the availability of some materials improved and suppliers had no difficulty fulfilling their contracts. Order intake for many processors weakened, as customers were no longer engaging in panic buying and thus inventory restocking came to an end. In addition, some companies took advantage of the public holidays and bridge days in May to temporarily suspend their production. And what can be expected in June? After four consecutive months of increases, the ethylene contract was fixed EUR 50/t lower. In combination with weak demand ahead of the summer holidays, this could indicate significant downward price adjustments. Furthermore, the first import volumes are expected to return to the market. If these shipments do indeed arrive, they could increase supply and push the market towards oversupply. Nevertheless, ordering activity is expected to remain at a low level. Converters are focused on lowering their stocks and will likely order only what they absolutely need.

PP: Price developments varied considerably in May. While the cost pass-through of propylene (up by EUR 120/t) was fixed in some negotiations, other processors were only able to achieve a rollover for standard compounds. Overall, producers were faced with declining demand. Although production continued to be affected, the supply situation in Europe eased slightly. Nevertheless, many processors had major problems passing on the sharp rise in costs to their customers. The resulting reluctance to buy and the low number of production days in May noticeably curtailed demand. After four consecutive months of price increases, the contract for the precursor propylene was adjusted downwards by EUR 30/t. This opens the door to correcting the price level for polypropylene. Significantly more imports are expected in June. As production in Asia is also restricted by the conflict in the Middle East, it remains to be seen what volumes will actually arrive. The statements regarding the development of demand are uniformly negative. The development of prices for reinforced compounds was more dramatic: producers once again had to pass on increased costs to their customers – even at the risk of suppressing demand altogether through price increases of around EUR 350/t. Capacity utilisation across most production lines remained stable at a low level. Many processors were keeping a close eye on developments. Prices are likely to rise again in June, but only slightly. No momentum is expected in terms of ordering activity.

PVC: The market calmed significantly in May. Although the sharp increase in the ethylene contract (up EUR 100/t) created further upward pressure, unlike in the previous month most suppliers limited themselves to passing on the higher raw material costs, i.e. they passed through roughly half of the C2 increase. At the same time, demand weakened noticeably. Many processors purchased only to cover their immediate requirements. In particular, the pipe segment reported increasing reluctance to buy. Meanwhile, the supply situation was considerably more relaxed than in the previous month. In addition to the existing production cutbacks, output was reduced only by maintenance work at one plant and an unplanned production outage. Nevertheless, sufficient material remained available. For June, there are growing signs of a reversal in price trends. Following the end of the ethylene price rally and the settlement of the contract for the upstream product at EUR 1,645/t, EUR 50/t lower than previously, processors are expected to continue restricting purchasing activity to immediate requirements while reducing existing inventories. Suppliers seeking to place volumes will therefore increasingly have to consider making price concessions. No additional demand stimulus is currently in sight.

Styrenics: Prices continued to trend upwards in May 2026. The level of premiums for polystyrene was generally based on the recent increase in the SM reference (up EUR 55/t). Premiums for EPS were sometimes below this level, depending on the respective supplier and previous pricing. ABS, by contrast, became more expensive, as the costs of the other key components butadiene (up EUR 200/t) and ACN (up EUR 168/t) increased much more sharply than the styrene price. The availability of materials improved noticeably. At the same time, demand declined, as the high price level deterred many processors from ordering more material than was necessary to keep up operations. In addition, many of them have ample stocks following the hedging purchases of the previous months. The upward momentum in styrenics prices has now slowed considerably. Although the SM spot price increased by a further EUR 15/t in June, it remains questionable whether this modest rise will be reflected in market prices, given the approaching summer slowdown. Even less change is expected for ABS prices, as the June declines in butadiene (down EUR 40/t) and ACN (down EUR 11/t) offset the higher cost of styrene.

PET: What had previously seemed like an extremely precarious situation on the European PET market eased considerably in May 2026 – much more rapidly than expected. On the supply side, significant declines in Asian production chains took everyone by surprise, resulting in falling import prices from East Asia. At the same time, customers adopted a more realistic approach after two months of panic buying to secure supplies. Fears of material shortages evaporated in light of the ongoing subdued demand during the peak season. While warehouses are now filled with expensive raw materials, the coffers are empty. And, as a result, some major buyers have already secured initial concessions from suppliers. Across the market as a whole, however, slight increases were seen again, particularly in the first half of the month. From the current perspective at the end of May, no major hikes are to be expected in June. All the signs point to a further easing. Given the unstable global situation, however, nothing is certain. Much will depend on what happens on the Asian markets.

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