Divergent Trends in LDPE Prices: US Market Rises, while Europe Witnesses a Decline

The Low-Density Polyethylene (LDPE) prices exhibited a contrasting trend in the third week of August, as the prices rose in the US, while a declining trend was seen in the European regions. The bullish trend followed by the US LDPE market was due to heightened demand from the downstream construction sector, as the industry is reviving. Also, overseas demand for the product has increased. On the other hand, the European LDPE prices primarily fell due to lackluster demand and the impact of macroeconomic activities. The feedstock Ethylene prices have also caused a significant impact on the product price in both regions.

In the United States, there has been a substantial demand for shipments of LDPE this month. The price of LDPE Film grade FOB Texas increased by 2% in the USA this week. Some of these shipments were for regular monthly sales, and certain companies purchased LDPE to maintain an inventory buffer due to the increasing hurricane season. This precaution was taken as storms began developing in the Atlantic region. Meanwhile, significant buying interest from South America, Asia, and Europe continued to absorb excess product supply. This buying trend redirected supplies away from the domestic market and stabilized prices. As spot supplies tightened, export demand remained strong, and potential storms loomed ahead, producers considered this upward momentum to support their efforts to increase prices. Feedstock Ethylene prices remained stable as the export sales for Polyethylene have flourished, driven by North American producers leveraging their cost-effective feedstocks derived from Natural Gas Liquids (NGLs). This contrasts with most international competitors who rely on the more expensive Crude Oil or Naphtha production chain for their resin sourcing.

The LDPE prices in Europe depreciated by 1.4% this week owing to sluggish product inquiries amidst weaker economic conditions. The decrease in feedstock Ethylene costs further escalated the general downward trend in LDPE prices, intensifying the difficulties in the market's recovery. Another substantial factor that significantly impacted the demand for LDPE was Europe's continuous summer holiday season. Throughout this timeframe, numerous buyers and manufacturers temporarily halted or scaled down their operations. Consequently, the market observed subdued demand patterns, adding to the pessimistic sentiment.

In plant news, Pemex has an unplanned shutdown in its Ethylene cracker by the end of July 2023. The plant is located in La Cangrejera, Mexico, and has a capacity of 650,000 MT/year. The Chevron Phillips plant shut its LDPE unit in mid-July 2023. The plant is located in Cedar Bayou, Texas, in the US, and has a plant capacity of 280,000 mt/year. The plant had an unplanned shutdown for a prolonged period, and a recent equipment malfunction caused the shutdown extension.

As per ChemAnalyst, the price of LDPE may rise this quarter in the US and Europe as the demand is expected to surge as demand from the Asian and US countries may increase from the downstream construction and packaging industries. Feedstock Ethylene prices are also anticipated to rise due to increasing Naphtha prices, which may influence the LDPE costs.