LDPE Prices Decline in Germany Amid Lackluster Demand And Inflationary Pressures

Europe’s Low-Density Polyethylene (LDPE) market is witnessing a notable price decline in the first week of July due to a combination of factors, including inflationary pressures and weak demand with ample product availability. The downstream packaging and construction industry has declined amid ongoing global economic turmoil. However, mixed market sentiments were observed in both the United States and the Asian region this week.

The price of Film grade LDPE in Germany fell by 2% in the first week of July on 7th July 2023. However, the feedstock Ethylene prices have witnessed an incline trend in the market. A stable price trend was observed for LDPE in the USA, as the feedstock Ethylene prices were also stable this week. However, the Chinese LDPE market has shown an upward trend amid increased demand from downstream industries, as the Adhesive film grade CFR Shanghai LDPE price rose by USD 10/MT this week. At the same time, the prices remained stable in India.

As per BASF, Ludwigshafen, Q2 report, the sales declined by an expected 25% in the second quarter of 2023. Considerably lower prices and volumes mainly drove this, and negative currency effects also contributed to the sales decline.

The US LDPE market has seen a stable trend as the demand from the downstream construction industry has been reported to be stable in June by the market participants. However, the construction sector in Europe has been reported to be declining as inflation is affecting the market.

The LDPE market in Europe has been grappling with lackluster demand, further intensifying the price decline. The economic slowdown reduced consumer spending, and cautious investment sentiments have contributed to the subdued demand for LDPE products in the packaging, construction, and automotive industries. The availability of ample LDPE supply has further contributed to the downward trajectory. Persistent inflation has impacted the consumption rate of the domestic market, which has lowered the prices. Eurostat, the statistical office of the European Union, has released a flash estimate stating that annual inflation in the Euro area is projected to decrease from 6.1% in May to 5.5% in June 2023. Although the inflation rate has reduced, it is still high to impact the market sentiments.

As per ChemAnalyst, the price of LDPE is expected to decline further this month amid inflationary pressures, while it may rise by the end of the third quarter of 2023 as the economy may improve in the European region. A similar price trend for LDPE is expected in the US, as the prices may show mixed sentiments in the third quarter of this year.