Hamburg (Germany): The global Low-density Polyethylene (LDPE) market experienced a decline in the first half of May 2024. This downturn in LDPE prices was noted across major markets including the US, Europe, and Asia. The primary causes for this decline were weakened demand and an oversupply of LDPE worldwide. Additionally, production costs were reduced due to lower prices of feedstock ethylene, naphtha, and crude oil. Geopolitical tensions causing disruptions in supply chains further compounded the pressure on the market. Consequently, European prices for film-grade FD Hamburg (Germany) decreased by 2%, US LDPE film-grade FOB Texas dropped by 1%, and Chinese LDPE adhesive film-grade CFR Shanghai prices saw a slight decrease of 0.7% during this timeframe.

In May 2024, the European market saw a second consecutive month of declining LDPE prices, with initial offers showing significant reductions rather than minor adjustments in some cases. This bearish trend is mainly due to abundant supply, weak demand, and competitive offers from overseas traders, rather than a decrease in monomer contract prices. Market participants are now considering whether these recent price reductions will boost sales, especially given the shorter month due to holidays. The drop in LDPE prices is attributed to decreased demand from key sectors like construction, automotive, and packaging, further aggravated by the absence of competitive pressure from cheaper imported materials. Even typically robust sectors in the spring, such as construction and beverages, are not showing signs of recovery. Additionally, the decreasing cost of feedstock ethylene has contributed to the overall decline in LDPE prices.

In the United States, the LDPE market experienced a slowdown from the active trading of previous weeks. LDPE prices followed a downward trend due to ample supply. The costs were further pressured by falling prices of feedstock ethylene and upstream naphtha, along with a general decline in crude oil prices. This drop in crude oil prices was due to increasing product inventories and concerns about weakened gasoline demand in the US, leading to a significant decrease in gasoline prices. Analysts observed that traders were purchasing prime LDPE railcars to replenish their stocks, while exports continued robustly, albeit with slightly lower prices to facilitate transactions.

Similarly, the Asian market, particularly in China, encountered a slowdown in trading activities, resulting in a dip in LDPE prices. Market participants are bracing for challenges post-holiday due to weakened supply-demand dynamics and reduced cost support. Concerns persist regarding abundant availability, with some converters noting that despite increased plant maintenance turnarounds, there's still a surplus due to the low uptake of polymer materials. The accumulation of domestic inventory post-holiday exacerbates these concerns. Moreover, the production of LDPE packaging film is anticipated to decrease, impacting buying sentiment. As the holiday ends, agricultural film production gradually shifts to its off-season, further contributing to weakened demand.