Deteriorating Demand Slumps the Global Prices of High-Density Polyethylene
- 14-Oct-2022 3:00 PM
- Journalist: Shiba Teramoto
Houston, USA- Deterred demand fundamentals and slow purchasing activities affected the global High-Density Polyethylene (HDPE) prices. Market participants in the USA traded with weaker spot prices and oversupply, which slowed trading activity. To a certain extent, HDPE producers have successfully reduced their olefin stocks and stemmed the slide in already well-discounted spot pricing. The supplies are still on the higher end even as contracts come down. With the week ending on 14th October 2022, the price of HDPE in the US declined to USD 1330/tonne (Film Grade) FOB Texas.
The slowing economy continued to apply downward pressure on spot and contract prices due to an extensive inventory overhang. Since the beginning of this month, major producers have cut their production rate, resulting in a steep drop in spot monomer prices affecting the polyolefin market.
If we focus on the European HDPE market, Germany no longer carries unconventional premium offers as polyolefin markets remain inflated and have seen sharp downward corrections. United Kingdom's premium offers for polyolefin markets have visibly narrowed as regional trading has substantially dropped in line with the regional downtrend.
A mixed sentiment prevailed in polyolefin markets due to clashing fears over supply and demand. Producers opted for lower run rates due to high energy costs and lower consumption. The suppliers tried to prevent inventory buildup despite already high stock levels. With the week ending on 14th October 2022, the price of HDPE will be reduced to USD 1360/tonne (Raffia Grade) FD Hamburg. Logistics costs and transportation charges further decline with sufficient vessel availability and shipping delay deliveries.
According to ChemAnalyst, the price of HDPE will further decline in the global market, prompted by frail demand and lower bidding of products in the region. Weak downstream plastic and food packaging sectors will further support the prices' downtrend. With adequate HDPE stock, trading dynamics will decline with lower bidding for the new stocks.