Demand Surge and Supply Chain Challenges Drive HDPE Price Hike in the USA
Demand Surge and Supply Chain Challenges Drive HDPE Price Hike in the USA

Demand Surge and Supply Chain Challenges Drive HDPE Price Hike in the USA

  • 05-Sep-2023 4:32 PM
  • Journalist: Rene Swann

In August 2023, High Density Polyethylene (HDPE) prices in the United States experienced fluctuations, ultimately trending upward. This increase was primarily driven by strong demand for HDPE from domestic and international markets, compounded by interruptions in the supply chain. Additionally, the price of feedstock Ethylene followed an upward trajectory during this period, further contributing to the overall HDPE price trend. Production rates remained steady, but there was a notable decrease in the number of new orders received. Furthermore, disruptions in the supply chain were caused by the hurricane season and the backlog of shipments in the Panama Canal caused by low water levels.

The HDPE market showed an inclination of 2% in the USA. Feedstock Ethylene showed an upshift as the demand has increased in the domestic market. The HDPE volumes being traded continued at a moderate but fairly positive speed compared to the previous month, even though both buyers and sellers have eased up from their more intense efforts that were noticeable earlier in the month. The demand for HDPE was firm as buyers made purchases as a precaution during hurricane season. The production was not impacted despite storms affecting the Pacific, Atlantic, and Caribbean regions. However, Tropical Storm Idalia threatened the Gulf Coast and Florida. The arrival of new offers was still relatively sluggish as producers were selling more products directly. The robust global demand for the product has been absorbing a significant portion of excess stock that producers aimed to offload.

In the US, the construction sector has been on the rise, resulting in higher consumption of HDPE in the region. This increased demand for HDPE has, in turn, caused a significant price surge. Additionally, there has been an uptick in demand from the Asian market, especially in China, which has further enhanced the upward movement of HDPE prices.

In plant news, Pemex had an unplanned shutdown of its Ethylene cracker by the end of July. The plant is located in La Cangrejera, Mexico, and has a capacity of 650,000 mt/year. The duration of the shutdown is ascertained. Additionally, Chevron Phillips Chemical Co. has imposed supply restrictions due to force majeure on HDPE resin produced at a plant located in Orange, Texas.

According to ChemAnalyst, the price of HDPE in the United States is anticipated to experience a significant rise in September and October. This upward movement is likely to be driven by the growing demand from the construction sector in the US and the anticipated economic improvement. Additionally, the expected price hikes in the feedstock Ethylene and upstream Naphtha, which are used in the production of HDPE, may also impact the pricing of HDPE.

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