US PE exporters see EU demand as tariff clarity emerges

Polyethylene market participants in the US remained cautious on the week ended July 30, following the European Commission's announcement that the EU and the US reached a significant agreement on trade and tariffs.

The deal, confirmed in an official statement by the European Commission President Ursula von der Leyen on July 27, set a 15% uniform tariff for most EU exports to the US and introduced zero-tariff access for a range of strategic goods.

"Now that [the] US and EU have a trade framework, sentiment is getting better," a source said on July 30. "The problem is Europeans will be on summer holidays during August, [which] will keep market activity down."

A second source echoed that the announcement provided greater certainty; however, the source highlighted that there was not an immediate impact, as the US polyethylene export market continued to face persistently weak demand, and EU market players were not expected to be active until September.

US market players also expressed concerns regarding the existing 6.5% tariff applied on US-origin polyethylene exports.

"I just heard from EU customers that [the tariffs] will be kept [at] 6.5%," a third source said.

The first source echoed that US-origin polyethylene will continue to be subject to the 6.5% tariff, although this was not confirmed.

A fourth source added that expectations were leaning toward a zero tariff for US-origin polyethylene, suggesting that a flat tariff structure could position the EU as a favorable outlet for US products, alleviating pressure on other markets.

According to the TARIC, the Integrated Tariff of the European Union, US-origin high-density polyethylene, low-density PE, and linear-low density PE were subject to a 6.5% tariff prior to the EU-US agreement.

With a 6.5% tariff scenario, market feedback indicated normal activity of US-origin volumes going to Europe was expected.

"We need more of these kinds of deals to get finalized in order to have some more stability in the market," a fifth source added.

US spot export polyethylene prices remained stable in the week ending July 30, as high inventory levels, along with poor demand across all polyethylene grades, were creating uncertainty for August pricing.

Platts assessed on July 30 blowmolding-grade HDPE at $838/mt FAS Houston, LLDPE butene at $904/mt FAS Houston and LDPE at $1,036/mt FAS Houston, all grades stable on the day and week.

Platts is part of S&P Global Energy.