The prices of Polypropylene (PP) and Low-Density Polyethylene (LDPE) in European markets are declining from the end of H1 2022 on the back of the cost-of-living crisis in Europe, which has negatively impacted the end-users demand dynamics. The PP and LDPE manufacturing units are slated to increase supply, which might create a supply-demand imbalance in the already poor performing sector.

With the economy worsening and anticipated additional production capacity, demand for polymers, such as polyethylene, polypropylene, and downstream polyvinyl chloride primarily from China and the US, experienced a coronavirus-induced boost from working from home and pharmaceutical needs, is now waning. The future for downstream polyvinyl chloride is negatively impacted by inflation, which is crucial for lending and, therefore, for big projects like those in the building industry.

The demand for Polyethylene (PE) from the durables industry has been impacted since the beginning of the summer. According to sources, macroeconomic concerns and inflationary pressures made it challenging to drop prices to spur buying desire. As a result of more people working from home and eating less frequently, demand for converters that supply the food packaging industry has fallen from the highs seen in 2019. Producer Borealis anticipates that PE and PP demand will decline further in the year's second half, along with overall consumer expenditure as individuals try to save money in the face of rising energy costs and inflation.

According to ChemAnalyst, the demand for PP and LDPE will likely continue to decline on the back of weak demand from the downstream, as it is evident as the appetite for PP and LDPE has reduced in the Automotive and Packaging sectors. Despite the weak state of downstream markets, the prices of PP and LDPE are likely to increase as Chemical manufacturers like Lyondell Basell are introducing energy surcharges on PP and LDPE. The fee will then automatically change in the following months in accordance with energy costs impacting PP and LDPE prices.