US HDPE Film Grade Prices Escalate Over Demand, Other Grades Perform Underwhelming
US HDPE Film Grade Prices Escalate Over Demand, Other Grades Perform Underwhelming

US HDPE Film Grade Prices Escalate Over Demand, Other Grades Perform Underwhelming

  • 27-Oct-2023 2:25 PM
  • Journalist: Harold Finch

High-Density Polyethylene (HDPE) prices have shown mixed behavior in the US market as different grades observe different market situations. In terms of production, costs continue to increase as input costs continue to rise due to increasing interest rates by the Federal Bank, which is expected to further increase interest by another 25 basis points in December 2023, and fluctuating prices of Crude Oil which depreciated in the first two weeks of October 2023 by almost 3.5% before resurging again in the third week.

Prices of HDPE (Film Grade) increased by almost 4% in the month of October as production costs continued to rise as factory gate charges increased. The major applications of HDPE are used in the packaging sector of FMCG firms, the demand for which was constant from the international market, particularly from Central American and Southeast Asian markets as festive seasons neared. The domestic demand from the packaging industries was also high as purchasing activities transitioned towards stocking up of comestibles and medicines, which further added pressure to the downstream packaging industry of FMCG goods. Retail sales increased in the United States by almost 2% in September and are expected to increase in October as inflationary behavior grasps hold of purchasing sentiments. Current inflation rates across the United States stand at approximately 4.5% as the Federal Bank failed to curtail inflation rates in the target corridor of 2%.

While prices of HDPE observed a bullish situation, the market situation of HDPE (Injection Molding and Blow Molding) grades observed a bearish situation, with prices depreciating by almost 1%. This is largely due to the slow demand from the downstream automotive and construction industry, which remained largely stagnant in September 2023, with automotive sales increasing marginally by only 2% in September with similar expectations in October. This compelled automotive production to witness a stagnancy as major automotive players reported piling up of automobiles across various dealerships. With production rates slowing and sales also stagnating, the supplies of HDPE (Injection Molding and Blow Molding) grades were largely left unconsumed, which created an oversupplied market, which proved detrimental for the prices of HDPE (Injection Molding and Blow Molding) grades.

Overall, HDPE (Film Grade) prices are expected to increase further as demand from the downstream packaging sector is likely to remain constant amidst rising upstream Crude Oil prices, which are expected to escalate as demand for LNG strengthens as the winter months of 2023 near. However, prices of HDPE (Injection Molding and Blow Molding) largely depend on the performance of the construction and automotive industry.

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