Lackluster Downstream Demand Slumps R-LLDPE Prices in the European Market

Hamburg, Germany- The Recycled Linear Low-Density Polyethylene (R-LLDPE) market showcased a downward trend in the European market in the third week of June 2023. According to sources, the price of R-LLDPE translucent pellets decreased by (0.7%) in Germany when compared with the previous week. Overall consumption of R-LLDPE showed a deep contraction from the downstream packaging and plastic industries and failed to regain momentum in the European region.

In the German market, the demand outlook of R-LLDPE from the downstream packaging and plastic industries is still questionable. There has been no indication of rising demand in the current scenario amid regular inflows of material leading to an oversupply of products in domestic ports. Additionally, easy access to raw material LLDPE, low labor costs, and declining Natural Gas prices cause lower production costs of the R-LLDPE in the region. This manipulated traders from other European and Asian regions to offer lower bidding for this commodity, consequently prompting market participants to keep the prices viable.

Market sources primarily ascribed that this descending trend was witnessed on account of sluggish queries and excessive availability of R-LLDPE in the market. Nevertheless, the declining upstream Crude Oil pressurized market participants to keep the prices on the weaker slope and retain the prices competitive. Meanwhile, the market fundamentals remain bearish, despite efforts to manage the supply-demand balance by cutting production rates; significantly, traders are experiencing a softening trend.

Since the spot market of R-LLDPE continued to see a rapid drop across the week, despite the lower spot price offers, demand from the enterprises remained low as the recyclers were seen struggling with declining demand situations and found to claim lower operation rates. Furthermore, providers continued to receive inquiries about the product with enough records. In addition, trades of R-LLDPE among the European and Asian regions also dropped as enterprises did not show any interest in bulk purchasing; instead, market participant purchased their stocks immediately, resulting in fewer trading activities in the European exchange.

As per ChemAnalyst, the price for R-LLDPE in the European market may remain extremely challenging in the forthcoming weeks of June 2023, as sources said that the current price levels were loss-making for most recyclers. The demand outlook is still uncertain, and there has been no indication of rising demand from the major associated downstream packaging and plastic industries. Additionally, the region's inventory levels of R-LLDPE were reasonable, and the entire supply chain was running smoothly. Furthermore, participants in the market reported that there were no issues with product supply in the current scenario. Furthermore, slow economic conditions and recession fears might further manipulate the market dynamics.