LLDPE Floats on a Balanced Boat, August’s Prices Remain Stable in the US and Europe

During August 2023, countries involving the US and major European countries like Germany experienced a balanced demand-supply situation, which led to an overall price stability of the product. This price stability of LLDPE can be attributed to consistent demand from downstream packaging, construction, and automotive industries, and sufficient stock to meet domestic market needs. Several factors contributed to this price trend including steady demand amid ample supply though feedstock prices remained high, and the influence of economic conditions and interest rates on consumer sentiment, all impacting LLDPE prices.

In the US, LLDPE prices remained unchanged in August following a previous decline in July due to weak demand and ample inventories. Market participants managed to maintain price stability as new offers from producers were slow to arrive, as they preferred direct selling. Feedstock Ethylene prices remained high due to increased Naphtha prices in the region, but this did not have a significant impact on LLDPE pricing. Further, Crude oil prices increased in the US during the same month. Further, US manufacturing continued to contract for the 10th consecutive month in August, although the pace of decline slowed down, suggesting a potential stabilization of the sector at lower levels, which directly affected the market dynamics and influenced LLDPE consumptions. Additionally, sluggish demand from China, a major importer of LLDPE, has affected prices in the US, due to the economic slowdown in China, consumption of LLDPE was observed to be reduced effectively.

In the European LLDPE market, similar stability was observed in August following a previous month’s decline. Germany's manufacturing sector, which accounts for a significant portion of its economy, remained in a downturn in August due to weak demand and declining output, as conveyed by market participants. The European economy's impact on consumer sentiment has also played a role in influencing LLDPE prices as the demand remained moderately low from the downstream construction and packaging sectors

In plant news, Chevron Phillips had an unplanned shutdown in its LLDPE unit in mid-July and the duration of the shutdown continued due to equipment malfunction. The plant is located in Cedar Bayou, Texas in the US, and has a plant capacity of 520,000 mt/year.

In La Cangrejera, Mexico, Pemex has an unplanned shutdown of its Ethylene cracker by end-July 2023. The duration of this shutdown remains uncertain and the plant capacity is 650,000 mt/year.

According to ChemAnalyst, there is an anticipation of a price rise for LLDPE in the United States and Europe in the coming months. This price surge is expected to be influenced by the growing demand from the US construction industry and the prospect of improving economic conditions. Additionally, the expected price increment of feedstock Ethylene and upstream Naphtha might also have an impact on the pricing of LLDPE.