LDPE Prices Slips in US and Asia, Stable in Europe Due to Bearish Demand

In the last week of August 2024, the global Low-Density Polyethylene (LDPE) market experienced a downward trend, driven by reduced demand from downstream industries and lower raw material costs. While LDPE prices in Germany remained stable, prices in the USA and Asian markets declined, with the USA seeing a 1.6% decrease in Film grade FOB Texas and China experiencing a 0.7% drop in Adhesive Film grade CFR Shanghai. The decline in the USA was further influenced by a Canadian rail lockout impacting logistics and demand, whereas in Asia, easing ocean freight rates to Northern Europe and the Mediterranean, along with reduced demand from construction, packaging, and automotive sectors amid port congestions, contributed to the price drop.

In the USA, LDPE prices fell by the end of August due to reduced downstream inquiries and declining feedstock Ethylene costs as spot buying interest diminished, with volumes dropping below average. Export demand for LDPE also weakened, especially from Asia, amid sluggish demand from China. Additionally, market dynamics were affected by a brief Canadian rail lockout that lasted only eighteen hours but caused some diversions away from Vancouver, exacerbating congestion at Tacoma terminals. The potential threat of an ILA port worker strike in October at East Coast and Gulf ports also looms, prompting traders to increase inventories beforehand. These factors led to a decline in LDPE prices this week as overall demand remained sluggish.

Meanwhile, in the European LDPE market, prices remained stable despite low domestic demand, driven by a consistently tight supply situation and limited offers throughout the week. Spot trading activity was sluggish as many market participants were still returning from their summer break. The focus has now shifted to the upcoming feedstock Ethylene contract price settlement in September, which is expected to influence future market dynamics.

Furthermore, the Asian LDPE market experienced a slowdown in trading activities toward the end of August due to easing upstream Naphtha prices and lower import costs from Middle Eastern countries. Moreover, the slight decrease in LDPE prices in China reflected these lower import costs and a cautious approach to inventory accumulation, as indicated by the gradual increase in agricultural film production rates. The restart of maintenance facilities and an increase in supply also contributed to the overall price decline.

As per ChemAnalyst, the LDPE prices is anticipated to increase in Asian and Germany market as the demand may rebound from the downstream industries. However, the US LDPE market may ease as the demand may remain moderate while supply may remain sufficient in the region. Further, the price of feedstock Ethylene and upstream Crude oil may further influence the price trajectory of the product in the global market.