In December 2023, the Low-Density Polyethylene (LDPE) market saw a decline in Western markets, particularly in the US and Europe. This decrease in prices can be primarily attributed to the global weak demand for LDPE and the ample availability of stock. The reduction in the costs of feedstock Ethylene and upstream Naphtha in the region has also played a role in driving down LDPE prices. Additionally, factors such as the holiday season, geopolitical tensions in the Middle East, supply chain disruptions due to low water levels in the Panama Canal, and an attack by Houthi rebels impacting transportation in the Red Sea amid an economic slowdown, have collectively influenced market dynamics and contributed to the pricing fluctuations of LDPE during this period.

The US LDPE market showed a downshift as the demand from the downstream packaging and construction industries remained sluggish during this month. The cost of the raw material Ethylene has been experiencing volatility as market activity heightened prior to the holiday season. Concurrently, upstream Naphtha observed a downturn due to the reduction in Crude oil prices, which collectively resulted in a decrease in the price of LDPE. Further, initially, this month witnessed healthy market activity, characterized by the usual continuous customer order flow for LDPE.  On the other side, certain buyers persisted in reducing their purchasing efforts as the year drew to a close. They held a positive outlook, anticipating the possibility of December discounts carrying over into January. Meanwhile, export demand from the US remained stable in Europe and Latin America. Sellers were open to fair offers, resulting in reduced prices in exchange for larger quantities, albeit with some constraints on the extent of discounts. Overall, this dynamic contributed to the decline in LDPE prices in the USA.

In Europe, the decline in LDPE prices can be attributed to lower costs of feedstock Ethylene and subdued demand from the regional market. The reduction in feedstock Ethylene, influenced by decreasing upstream Naphtha and fluctuating Crude oil prices, has alleviated production expenses for LDPE. Further, the lackluster demand for LDPE in the market is a result of challenging economic conditions and restrained purchasing activities, deviating from the typical seasonal demand patterns. Moreover, security concerns emerged in mid-December following attacks on commercial vessels in the southern Red Sea. As the crisis intensified just before the Christmas holidays, global concerns about supply chain disruptions heightened. The consequent surge in freight rates for container shipments has impacted polymer markets, prompting sellers to consider price hikes.

According to ChemAnalyst, LDPE prices are expected to rebound in January, driven by potential increases in demand and rising freight charges amid shipment congestions in the Panama Canal. The situation is further compounded by the possibility of extended disturbances in the Red Sea and Bab-el-Mandeb Strait. If wait times at the Panama Canal continue to escalate, exporters might be compelled to explore alternative routes, such as navigating around the tip of Africa through the Cape of Good Hope. However, this alternative poses challenges, including increased distance, longer transit times, higher fuel costs, and potential disruptions associated with the extended voyage, thereby introducing logistical and economic complexities for exporters. Moreover, the anticipated surge in Crude oil prices, expected with further production cuts by OPEC+ countries from January 2024, may also contribute to increased production costs for LDPE.