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DEMAND IS DECREASING SUBSTANTIALLY IN EUROPE

June 15, 2022
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Demand is decreasing substantially in Europe in June across most polymer markets amid a multitude of pressures. With energy prices remaining firm, producers’ margins could suffer a major squeeze.

Prices have continued to go up after the onset of war. But the slowdown in demand because of inflationary pressures and competitive imports from regions with lower energy costs are causing a dramatic fall in demand in Europe.

Moreover, buyers are struggling to pass on the continuous increases in costs amid supply chain disruptions.

In this market environment, buyers are destocking, probably also those volumes accumulated becasuse of panic after the war started.

An element of seasonal slowdown ahead of the summer is probably also adding downward pressure on demand.

The decreases in demand are quite substantial, up to 40% in the case of acrylonitrile butadiene styrene (ABS). However, other markets are also slowing down, such as polypropylene (PP), polystyrene (PS), nylon (PA6/PA66), and polycarbonate (PC).

There are downstream markets that are still holding up well, such as electrical and electronics and construciton. But players in these markets are also beginning to experience signs of weakness.

While it is too early to see this as the start of a a major trend, prices could continue to soften during the summer months.

And as energy costs remain firm and threaten to spike again, prices will most probably fail to fall back towards their long term trend. But for now sharp downward corrections appear to be unavoidable in June.

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