The oversupply due to low demand and competitive imports has forced producers to heavily reduce operating rates. Overall production in Europe is estimated to be at around 60% of capacity or even lower.
The poor market environment and pressure on all players to reduce inventories has fuelled competition which has led to lower prices and margins.
The current oversupply looks set to persist most certainly until the end of the year and possibly into next year. The new covid outbreaks in China will probably continue to support the current trend in imports from the region.
At the same time, the high energy prices, namely gas prices expected to remain well above their long-term trend, will continue to slow down exports.
This trend in trade of lower exports and higher imports seen this year (Exhibit 3) should remain in place, at least until the first quarter of next year.
Meanwhile, raw material prices seem to have stabilised. However, softer demand in Asia could increase volumes also of raw materials to Europe, rising the chances of further downward corrections in costs.
The market update is an exerpt fromt the monthly report.
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