HDPE Market Soars in Europe and US Amid Supply Shortages and Surging Demand

In the initial half of February 2024, High-Density Polyethylene (HDPE) experienced an upward price trajectory across Europe and the United States, primarily driven by supply shortages and a surge in demand from the market. In Europe, the upswing in HDPE prices was mainly attributed to constrained supplies coupled with delayed cargo. Meanwhile, in the US, HDPE prices surged due to heightened demand from downstream industries such as construction and packaging. Further, the rising prices of feedstock Ethylene and upstream Naphtha and Crude oil have had a significant impact on the production costs of HDPE in both regions, contributing to the upward pressure on prices. Furthermore, supply disruptions in key transportation routes like the Panama Canal and the Red Sea have also played a role in influencing the pricing dynamics of the product, adding to the market volatility experienced during this period.

During this timeframe, the demand for HDPE in the US market exhibited bullish tendencies, with prices rise of 2% for Injection molding grade FOB Texas(USA). Trading activities remained robust, with market participants actively engaging in spot market transactions amidst constrained availability. The upward trajectory of HDPE prices can be further attributed to the heightened costs of feedstock Ethylene and upstream Naphtha, exerting increased cost pressures on the product. Moreover, the surge in export demand, propelled by ongoing logistical challenges, provided producers with additional opportunities to sell their products at elevated prices. Consequently, this heightened export activity facilitated the reduction of excess resin from the domestic market, resulting in tightened domestic supplies and upward pressure on domestic HDPE prices. This overall escalation in HDPE prices aligns with anticipated trends, as international resin prices have strengthened concurrently with the rise in freight costs. The recent uptick in PE spot prices throughout the month has encouraged producers to advocate for another price increase in February, following a successful hike implemented in January.

The HDPE market in Europe witnessed a price increase of 2% for Injection grade FD Hamburg(Germany), primarily fueled by constrained supplies stemming from delayed cargo arrivals from the Middle East and limited material quantities from the US. This upward trend was further reinforced by reduced output rates and regional outages. Despite this, overall demand remained relatively stable, marked by subdued activity within end-user industries. Further, market participants in the European market faced significant price hikes in February offers from local producers, despite only a marginal increase in feedstock Ethylene prices. The scarcity of import options and reduced allocations compelled suppliers to prioritize margin expansion, particularly after enduring negative margins for several months. With the February ethylene settlement showing a modest uptick due to sluggish demand in January, the substantial price hikes sought by HDPE suppliers in February will significantly aid them in reclaiming the margins lost over the past few months. Meanwhile, market players are directing their attention toward March, primarily engaging in discussions centered around potential Ethylene contract price settlements for the upcoming month.