LDPE Prices Rise in the United States Amidst Surging Demand and High Feedstock Costs
- 07-Sep-2023 12:03 PM
- Journalist: Gabreilla Figueroa
In August 2023, Low-Density Polyethylene (LDPE) prices in the United States underwent fluctuations but ultimately showed an upward trend. This increase was mainly due to strong LDPE demand from domestic and international markets and disruptions in the supply chain. Moreover, the price of the feedstock Ethylene also followed an upward trajectory during this period, further contributing to the overall rise in LDPE prices. Although production rates remained stable, there was a noticeable decrease in the number of new orders received. Additionally, supply chain disruptions were caused by the hurricane season and shipping delays in the Panama Canal due to low water levels.
The LDPE market in the USA experienced a 1% increase, while feedstock Ethylene saw an upward shift in prices due to increased demand in the domestic market. LDPE trading volumes continued at a moderate pace, although both buyers and sellers scaled back their efforts compared to earlier in the month. LDPE demand remained firm as buyers made precautionary purchases during the hurricane season. Despite storms affecting various regions, production was not significantly impacted, except for potential threats from Tropical Storm Idalia in the Gulf Coast and Florida. The arrival of new offers from producers remained slow as they preferred to sell directly. Global demand for LDPE absorbed much of the excess stock that producers aimed to offload.
The construction sector experienced growth in the US, leading to higher LDPE consumption in the region. This increased demand for LDPE contributed to a significant price surge in the region. Additionally, there was increased demand from the Asian market, especially in China, further bolstering LDPE price increases. Furthermore, US manufacturing experienced its 10th consecutive month of contraction in August. However, the rate of decline has been gradually decreasing, which suggests a potential stabilization of the sector at levels lower than in the past.
In plant news, at the end of July, Pemex experienced an unplanned shutdown of its Ethylene cracker in La Cangrejera, Mexico, with a capacity of 650,000 mt/year. The duration of this shutdown was not specified. Additionally, Chevron Phillips Chemical Co. has imposed supply restrictions due to force majeure on LDPE resin produced at a plant located in Orange, Texas.
According to ChemAnalyst, it is expected that LDPE prices in the United States will see a significant rise in the upcoming months of 2023. This upward movement is likely to be driven by the growing demand from the US construction sector and anticipated economic improvements. Additionally, expected price increases in feedstock Ethylene and upstream Naphtha, both used in LDPE production, may also impact the product pricing.