The European Polypropylene (PP) market witnessed a price decline at the end of February 2025, following previous gains, as weak demand conditions exerted downward pressure. Despite production curtailments since November 2024, market discussions remained muted, with regional converters receiving limited orders for March 2025

The price drop occurred even as imports from the Middle East and Far East Asia remained low. In the Middle East, higher import offers pushed costs up, but trading remained sluggish. With Ramadan approaching, PP producers in the exporting Middle East market are expected to reduce production, leading to further declines in market activity as buyers delay restocking. Similarly, South Korean duty-free PP cargoes remained restricted due to operational disruptions at LG Chem and Lotte Chemical's Daesan plants, which suffered shutdowns after an electrical supply failure resulting in 1.15 million tonnes/year of Propylene capacity and 883,000 tonnes/year of PP capacity being offline. These outages affected naphtha crackers and PP production, initially driving up European PP prices before weaker demand pulled them down.   With no known restart date at present, arrival of PP from South Korea is likely to remain clipped since LG Chemical and Lotte Chemicals remain some of the biggest suppliers to the European market.

Furthermore, in the domestic European market, despite persistent supply constraints, buying activity remained subdued as market participants awaited key price announcements in March. Market insights reveal that contract price negotiations for March 2025 are expected to be challenging just in January 2025 and February 2025, with producers seeking price increases while buyers focusing on competitiveness. While underlying demand remained moderate to low, packaging was the only sector maintaining near-normal order volumes, which continued to sustain the price increments in the European PP market, until the penultimate week of February 2025.  The buying restraint of converters generally could induce some producers to be content with somewhat smaller price increases, which may result in prices witnessing only some increments.

Anticipations concerning for March 2025, PP prices are expected to rise again as imports from the Middle East remain restricted due to producers lowering run rates and reducing working hours, leading to delayed and limited arrivals in the European market. Additionally, with no clear timeline from LG Chem and Lotte Chemical regarding the resumption of production, duty-free South Korean PP cargoes are anticipated to remain constrained. Combined with reduced run rates in the regional European market, these factors are likely to contribute to pockets of scarcity in the market, supporting upward price trends in the coming weeks.