LDPE Market Sees Varied Trends: US and Asia Prices Rise Amid Supply Challenges, While Europe Remains Stable

This week, the global Low-Density Polyethylene (LDPE) market demonstrated varied trends, with prices increasing in the US and Asia while remaining stable in Europe. In the United States, the rise in LDPE prices was driven by robust domestic trading activity and the effects of Hurricane Beryl. European and Asian LDPE markets experienced supply challenges amid moderate to low demand from downstream sectors such as construction, packaging, and automotive. Additionally, the price of Ethylene feedstock decreased in Europe and Asia but increased in the US. As a result, LDPE prices in the US rose by 2% for Film grade FOB Texas, while China's LDPE Adhesive Film grade CFR Shanghai saw a 1% increase by July 12, 2024.

The US LDPE market continued to rise this week, supported by strong downstream demand and active trading activities. A significant volume of LDPE transactions occurred as processors and resellers acquired additional materials in anticipation of Hurricane Beryl, which unexpectedly struck the Houston area. The storm caused severe winds and over a foot of rain, resulting in widespread flooding and logistical disruptions that complicated recovery efforts. Major polyethylene producers such as Ineos, Formosa, LyondellBasell, Baystar, and Dow proactively shut down operations or implemented weather-related plans to mitigate the impact. Despite disruptions in resin production, which reduced the demand for Ethylene monomers, feedstock prices remained resilient and increased. This situation has contributed to rising LDPE prices in the US, highlighting the ongoing strain and adjustments within the market.

Meanwhile, in Europe, the stability in LDPE prices can be attributed primarily to a balanced supply and demand dynamic. Market sentiment remains bearish amid a sluggish summer season, with limited expectations for a demand recovery. Converters are responding by extending facility outages; some have shut down earlier than planned, and others are expected to remain offline longer than scheduled.  Additionally, the ongoing Red Sea crisis has worsened supply chain challenges, forcing vessels to reroute around the Cape of Good Hope. Maersk reports that this redirection has led to congestion at alternative routes and important. The cascading effects of these disruptions are significantly impacting global supply chains, further compounding the supply issues in the European LDPE market. However, low demand from downstream industries has led to overall price consistency.

According to ChemAnalyst, the price of LDPE is expected to ease in July in both the United States and Europe. This anticipated price reduction is primarily driven by declining demand from key downstream industries coupled with ample supply in the domestic market. However, contrasting trends may be observed in Asia, where LDPE prices may continue to rise in the coming weeks. This upward pressure on prices in Asia is attributed to increasing freight rates caused by port congestions, which complicate the supply chain and add to the cost of shipping and handling, thus potentially offsetting any price relief experienced in other regions.