LDPE Prices Tumble in US and Europe Amid Economic Uncertainties and Low Demand

In the US and Europe, the prices of Low-Density Polyethylene (LDPE) experienced a decline during the month of June. Prices of LDPE in the European nation are being affected by a combination of factors, including continuously low demand, ample supply in the region, and the presence of competitively priced imported shipments from suppliers overseas. These factors are collectively putting downward pressure on prices. Similarly, the US’s LDPE market is also impacted by uncertainties due to the prevailing global economic conditions.

The LDPE prices in Germany contracted by an overall 1% this month amidst lackluster demand from the downstream packaging, automotive, and construction industries. Upstream Ethylene prices have also followed a downward price movement in June. The Crude oil prices also have shown fluctuations that impacted LDPE prices. Buyers in the LDPE market have reduced their purchasing activities, opting for need-based purchases and keeping minimal inventory levels due to subduing demand sentiments. Some buyers are also operating their plants at lower capacities as weak economic fundamentals, including inflationary pressures and a recessionary environment, continue to restrict demand from end users.

The US’s LDPE market has witnessed a bearish sentiment this month on account of reduced demand from the downstream industries. The LDPE FOB Texas (USA) price has dropped by 7% this month. Further, the ease in feedstock Ethylene prices has led the prices to downturn. The import demand from Asian nations for LDPE has been significantly low in this season than expected amid the global economic slowdown, thus, influencing the cost of LDPE. Furthermore, producers in the region prioritize operating their plants at reduced capacities, aiming to maintain minimal operational levels intending to achieve a balance in market fundamentals. Moreover, market participants are cautious about making new purchases as they expect feedstock Ethylene prices to drop further.

Plant shutdown was reported in Germany as the BASF plant was shut down for maintenance turnaround on 9th June 2023 for two weeks. The facility, which has a capacity of 620,000 MT per year, is situated in Ludwigshafen, Germany.

A plant shutdown for upstream Ethylene was seen as Chevron Philips Chemical had an unplanned shutdown on 14th June. The plant is located in Cedar Bayou in Texas and has a 1.725 million mt/year capacity.

As per ChemAnalyst analysis, the prices of LDPE in the US and Europe are expected to show a marginal decline in the prices for the first week of July 2023. The market sentiments might still be dominated by the recession in the European region and the geopolitical tensions due to the Russia-Ukraine war. The US market for LDPE is anticipated to be affected by unhealthy purchasing activities from downstream packaging industries; however, the construction industry is likely to show favorable outcomes.