European polypropylene (PP) prices in December fell more than expected amid weak demand and competitive imports, helped also by the strengthening of the Euro. Recovery hopes are modest, with a short-term stability and a potential slight improvement later in the year.
Demand remains worryingly low, impacted by poor macroeconomic conditions, despite some resilience in certain sectors. The market is therefore still oversupplied also because of destocking for the end of the year by most market participants.
Amid weaker market conditions, prices have experienced a more significant dip than expected, suggesting a lower trajectory in the short-term compared to the previous forecast. The absence of strong indicators for a turnaround in the early part of next year, as most downstream markets continue to exhibit weakness, further supports this outlook.
Additionally, as suppliers aim to destock due to stagnant demand, which is not expected to rebound in the early first quarter, there will likely be reduced motivation to restock, resulting in subdued demand at the beginning year. However, some support is expected to emerge later in the first quarter and into the second quarter, owing to seasonal factors and expected slight improvement in market conditions.
While more evidence is needed for a definitive positive outlook, emerging signs, especially lower inflation, suggest growing confidence in lower interest rates. This may not spark a significant rebound but should help prevent further declines in demand, which is highlighted by the upward revision at the tail end of the forecasts.
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The GC Intelligence™ Polypropylene (PP) Market Prices, Forecasts, and Analysis reports are published monthly. The reports contain historical, current, and forecast prices of Copolymer Homopolymer, and Post-Consumer Recycled (PCR) PP.
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