Germany: Despite the year-end destocking Propylene prices in Europe including Germany have rebounded during the second half of December 2024. Since November 2024, the Propylene market players have been continuously witnessing a significant decline in their prices. This decline was attributed to low demand from the downstream polyPropylene sector and subdued consumer confidence. However, a wave of surprising shifts rebounded the prices as several market players addressed lower-than-expected production levels during this period.

After a period of decline in the first half of December, European Propylene markets have exhibited a surprising shift, with prices beginning to rebound in the latter half of the month. Previously, the European Propylene market experienced a slowdown in spot activity as market participants adopted a cautious approach ahead of the winter downturn. Sluggish demand from the downstream polymer sector further pressured prices. Moreover, early destocking efforts by industry players exacerbated the downward pressure on prices.

However, a shift in the market has altered the dynamics from bearish to bullish due to supply chain disruptions. Rail car shortages and logistical challenges have disrupted the smooth flow of Propylene, limiting supply availability as the shortage of trucks heading into December has somewhat kept the supply fundamentals elevated due to the imposition of Carrier-imposed General Rate Increases (GRIs). This supply constraint has provided support to prices, as buyers are compelled to secure supplies, even at higher costs.

Unexpected resurgent demand from the downstream polyPropylene sector has surprised the dynamics, as several buyers were reluctant to adapt to the changes. Despite a decline in the downstream PolyPropylene prices, the demand for PolyPropylene has rebounded ahead of the New Year discussions. Several markets where traders were actively discussing long-term price trends, with paper trading suggesting a continuation of the current contango structure. This surge in demand has provided a much-needed boost to Propylene prices, as buyers compete for limited supplies.

Processors, enticed by the most competitive prices of the year, significantly increased their purchase volumes. This was further bolstered by resellers actively replenishing their inventories through both truckload purchases and securing railcars for future sales.

Moreover, lower-than-expected production levels from key suppliers have tightened the supply-demand balance. Reduced production output has further limited the availability of Propylene in the market, contributing to the upward price movement. As per the EIA data, Propane/Propylene inventories have decreased which further tightened the market.

While the recent price rebound is encouraging, the outlook for Propylene prices remains uncertain. Several factors will continue to influence market dynamics in the coming months.