Global LDPE Market Diverges: European Prices Tumble as Asia Experiences Mixed Trends

The global Low-Density Polyethylene (LDPE) market witnessed mixed price movements this week, with prices dropping in Europe while experiencing a slight increase in Asia. In Europe, the LDPE market continued its downward trajectory, primarily influenced by declining demand from key downstream industries, particularly the construction and automotive sectors. These sectors are struggling amid the region’s ongoing economic challenges, resulting in subdued demand and price softening for LDPE. Conversely, the Asian LDPE market presented a mixed outlook. Demand remained steady to soft, yet prices showed variations across different countries.  In certain areas of Asia, LDPE prices rose as a result of fluctuating feedstock costs and supply chain disruptions, while in other regions, prices stayed relatively steady. The Asian market was notably influenced by feedstock Ethylene and upstream Naphtha prices, which exerted additional cost pressures on LDPE producers. Port congestion and severe weather conditions, coupled with disturbances in the Middle East, also played a role in shaping market dynamics, creating uncertainty in the supply chain and impacting availability. Specifically, in China, LDPE prices for the Adhesive Film grade increased marginally by 0.7%, reaching a price level for CFR Shanghai. Meanwhile, in Europe, the price for LDPE Film grade FD Hamburg eased by 1.6% as demand from downstream sectors remained weak concluding on October 11, 2024.

This week, LDPE prices in Europe declined as feedstock Ethylene prices dropped, and trading activity in the region remained sluggish. Buyers hesitated to make substantial purchases, anticipating further price reductions of LDPE, while sellers focused on destocking inventories amid weakening demand from derivative industries, signaling a broader contraction in market activity. The downward trend was further influenced by easing freight rates from Asia to Europe, which increased product supply and put additional pressure on prices. Drewry’s composite World Container Index (WCI) showed a 4% decline globally, with a sharper 8% drop on the Asia-Europe route, highlighting that supply capacity now exceeds demand. As shipping conditions stabilize, favoring shippers, LDPE prices are likely to stay bearish, driven by ample supply and cautious buyer sentiment.

Meanwhile, in China, LDPE prices saw a marginal increase this week, supported by stable feedstock Ethylene costs and consistent downstream demand, resulting in higher quotations compared to previous months. Despite this price uptick, market activity remained relatively subdued, with buying sentiment hovering in the steady to soft range. However, import market negotiations picked up, prompting participants to slightly raise their bids for November-December cargoes. Overseas sellers are expected to begin offering November-loading cargoes by late October, influencing market expectations. While LDPE prices rose amid elevated offers and buying interest, the widening gap between purchase and offer ideas limited the potential for deals. Additionally, global container port congestion has eased, with Chinese ports clearing the backlog accumulated since late September, aiding in smoother trade flows.

In plant News, Sinopec Shanghai Petrochemical has shut down its No.3 Low-Density Polyethylene (LDPE) unit for maintenance as of October 9, 2024. The facility is located in Shanghai, China, and has a production capacity of 120,000 MT/year. While the maintenance schedule has been initiated, the duration of the shutdown remains unspecified. 

As per ChemAnalyst the price trend for LDPE is anticipated to surge in November ahead of increased winter procurement activities in the European and Asian markets. Further, the expected increase in  upstream Crude oil prices and increased disturbances in the West Asian region might impact the market dynamics.