Russian Import Sanctions by the EU Send a Wave of Optimism in the European Polymer Market

Polypropylene (PP) and Polyethylene (PE) prices in Europe have been dull due to poor buying activities caused by high inflation rates. Few polymers like LDPE witnessed price rises in Europe owing to their urgent requirement in the downstream pharmaceutical industries, but in general, the buying sentiments for polymers in the market have been weak.

Upstream costs of Ethylene and Propylene have maintained a stable trend and a rising trend, respectively, but could not raise the prices of PE and PP in the European region. The EU has implemented a new package of sanctions against Russia, which includes an import ban on various polymers with immediate effect. Methanol is the primary product in the new ban list, which includes commodities like Polyethylenes and Polypropylene, along with Polystyrene and Polyvinyl Chloride. Russia is the largest producer and exporter of methanol, and this is an attempt by the EU to curb Russia's revenue to show their disagreement against Russia's invasion of Ukraine. Russia's biggest PE and PP manufacturer, Sibur, has reported that the export ban on the above-mentioned products has reduced the company's profit margins in 2022 compared to 2021.

Caustic soda, in addition to the chlorine derivatives, Vinyl Chloride Monomer (VCM), sodium chlorate, methylene chloride, perchloroethylene, melamine, polyvinyl acetate, and engineering polymers like polycarbonate and Polymethyl Methacrylate (PMMA), are also included in the ban list. The recent ban list includes industrial gases oxygen, hydrogen, nitrogen, and various rubbers made from butadiene. Hydrogen peroxide, methionine, calcium carbonate, various paints, pigments, printing inks, and finishing agents for dyestuffs are some of the other significant products that cannot be exported from the EU to Russia once this new sanction is brought into action.

According to ChemAnalyst, the PE and PP prices in Europe likely to be not affected by the new sanctions as the demand for PE and PP are fragile, and the concern over recession is worsening buying attitude and the reduction in supply caused by the new sanctions against Russia is not going to rise the demand of PE and PP.