Lackluster Demand Leading to a Price Drop For LDPE in the Global Market

The price of Low-Density Polyethylene (LDPE) drifted sharply in the first week of June in the European market. This downward trend was witnessed on account of sluggish demand and excessive availability of the product in the market. The falling prices of feedstock Ethylene have further influenced the price of LDPE in the first week of June. Producers in the region are running their plants at reduced capacity levels in order to safeguard their profit margin and prevent financial setbacks. However, the weak demand from the downstream industry has led the prices to fall despite the curtailed production rate.

In the European region, LDPE showed a declining trend, and prices fell by 2% in Germany to hit USD 1670/MT LDPE Film grade FD Hamburg as on 9th June 2023. Furthermore, upstream Ethylene followed a downward price movement as it fell by 1% in Germany. The decline is a consequence of unfavorable economic conditions, including the presence of inflationary pressures and increasing indications of a potential increase in interest rates. Germany, an exporter of LDPE, saw a decline in demand from other European and Asian regions, leading to a reduced cost of products.

American market also witnessed a similar price trend for LDPE in the first week of June. LDPE's price decreased by 4% to reach USD 1212/MT LDPE Film grade FOB Texas on 9th June 2023 in the USA. The primary reason for the declining trend is the falling price of feedstock Ethylene, whose price dropped by 6% in the USA market. The lackluster demand for LDPE from the downstream industry has led to a reduced price in the American region. Furthermore, the USA witnessed sluggish demand for LDPE from the Asian market, thus supporting reasons for reduced prices.

The derivative sector, like packaging and construction, plays a crucial role and has experienced a significant slowdown over a considerable period in both the European and American markets with no indications of an imminent recovery. Market participants are not optimistic about any positive changes in the market's prospects for the near future.

As per ChemAnalyst, the price trend for LDPE in Europe may be bullish in the third quarter of the year with possible improvement in the economic conditions. The price trend of LDPE for the USA will also be similar and witness a positive price trend in the third quarter with the expectation of improved global economic activities and reduced inflation rates leading to increased product demand.