Polypropylene (PP) prices surged across the European market in early February 2025, driven by supply shortages from the Middle East and Asia, compounded by multiple plant outages. Historically lower-priced imports dwindled as South Korean suppliers raised prices for February deliveries, prompting European producers to follow suit amid rising feedstock Propylene (Polymer Grade) costs. Shipment delays and a sharp spike in propylene contract prices disrupted the market, keeping restocking efforts subdued post-settlement. High freight costs and a slowdown in Asia after the Lunar New Year further restricted imports, forcing European buyers to rely on domestic supply, which trades at a premium compared to Asian or Middle Eastern imports.

The market outlook for PP remains grim, with no signs of demand recovery. PP Buyers struggle to secure imports, while converters hold onto existing contracts. Domestic supply remains moderate, slowing the pace of price increases by mid-February. However, logistical challenges persist across inland European markets.

Key developments include significant price hikes: LyondellBasell, ExxonMobil, SABIC, and Braskem increased PP quotes by €70–100/t, while a South Korean producer raised its PP prices by €40/t, influencing European market rates. Additionally, one Western European producer has withdrawn homopolymer offers this month, while Vietnamese, South Korean, and Egyptian PP have become available. Spot prices continue to rise due to stronger offers from local and foreign suppliers.

PP prices rose approximately 1.2% across Europe in the first half of February, reflecting supply constraints and incremental price adjustments. Some producers have been operating at reduced rates—around 60-65% capacity since mid-December 2024—to counter prolonged bearish market conditions. Demand for PP remains weak, with only the packaging industry showing resilience, while automotive and construction sectors continue to struggle.

The European automotive sector presents a mixed outlook. New EU car registrations rose by 5.1%, led by Spain’s strong 28.8% increase, while France posted a modest 1.5% rise. However, Germany and Italy saw declines of -7.1% and -4.9%, respectively, keeping overall demand muted, according to the European Automobile Manufacturers' Association (ACEA). Meanwhile, the European construction industry is projected to contract by 0.5% in 2025, marking its fifth consecutive year of decline, with high inflation, rising material costs, and elevated interest rates pushing major firms toward insolvency.

With suppliers holding firm on prices and restocking activity picking up, PP prices are expected to rise further. Additionally, Middle Eastern supply disruptions ahead of Ramadan could tighten availability, adding further upward pressure to the market. As uncertainty looms, European market participants brace for continued volatility in the coming weeks, accompanied by carriers continuing to avoid trading route through the Red Sea, despite a cease fire being declared.