Due to the usual summer holidays, it is likely that the stagnation at the low price level will last even 4-6 weeks, from the beginning of June to the middle of July. The buying intention and activity of converters is expected to pick up at the end of July, on the one hand, because they start waiting for higher prices, and on the other hand, because the autumn season is approaching. As a result, we expect rising prices during August-September.
As autumn approaches, demand will probably pick up at the beginning of August and prices will start to rise. The price increase will probably last until the beginning of October, and we could also say that the October price increase will not go through due to a lack of demand.
How long will this fluctuation in prices last? Until something changes significantly in the European economy. On the one hand, a significant revival of demand would be needed in order for prices to move upwards permanently and for the length of the wave to increase. However, the revival of demand does not only require lower inflation and falling interest rates; it would be important for customers' confidence in the future to turn in a positive direction.
On the other hand, European polymer production should be reduced by almost 20% in 2024 compared to 2021. This is a very large number and not possible in the short term. However, several European polymer producers have recognized the situation, and there are reports of cracker shutdowns, which will be followed by the shutdown of polymer production capacities in the medium term, primarily in Western Europe.
On the supply map of Central Europe, we expect some major changes in the supply structure. Western European polymer manufacturers are likely to establish a greater presence in our region, as this market has growth potential at all. Some major European polymer producers intend to establish new logistics hubs in Central Europe in 2024. But big international traders also have similar plans. It should be noted here that, in contrast to Western European trends, PP and HDPE capacity expansions are expected in the South Central European region (SCE) in the coming years, due to which the market will shift in Central Europe.
In summary, we can conclude that we now have to live with fluctuating prices and volatility. It is important to identify the phases of the cycles well; buy at the right time and in sufficient quantities.
László Bűdy, Managing Director, myCeppi
