Polyethylene and polypropylene buyers have spent eighteen months in an unusually wide trading range, and the drivers are no longer purely feedstock-led.
Capacity additions are landing
Several large Middle Eastern and Chinese crackers commissioned over the past two years are now running at commercial rates. The supply-side effect is real but uneven — it is compressing spreads on commodity grades while specialty and high-ESCR grades hold their premium.
Freight is the swing factor
For buyers importing from the Gulf into Europe, sea freight has at times represented a larger share of landed cost movement than resin price itself. Converters who negotiate resin quarterly but freight spot are effectively unhedged.
What converters are doing
- Quarterly volume contracts with formula pricing tied to a published index rather than fixed nominal prices.
- Splitting supply across two origins — typically one Gulf and one regional producer — to retain leverage.
- Landed-cost quoting, insisting on CIF or DDP so the supplier absorbs freight volatility.
Outlook
Expect continued range-bound trading on commodity grades with periodic freight-driven spikes. Buyers with the flexibility to take material at short notice are capturing the best pricing.
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