LLDPE Prices Surge in Europe Amid Rising Feedstock Ethylene Costs
- 06-Oct-2023 12:41 PM
- Journalist: Kim Chul Son
In September 2023, the European market experienced a substantial increase in Linear Low-Density Polyethylene (LLDPE) prices. This price surge can be attributed to various factors, including primarily the escalating costs of the feedstock Ethylene driven by soaring prices of upstream Naphtha amid rising Crude oil prices in the global market. Further, market dynamics such as steady demand for LLDPE from downstream sectors, particularly packaging, construction, and automotive, impending disruptions in Asian-European shipping services due to typhoons, and the approaching Chinese National Day holiday, commonly referred to as Golden Week, have contributed to the price fluctuations.
The LLDPE prices have witnessed a hike of 9% for Film grade FD Hamburg (Germany) during the month, while the key driver for the price hike can be an upshift in feedstock Ethylene prices, which has impacted the product's production costs. This increase in Ethylene prices can attributed to the rising upstream Naphtha and Crude oil prices amid production cuts and tight supply in the global market. Further, the price increases observed in the LLDPE market can also be attributed to decreased material supplies. Regional plants have been operating at lower output rates, and limited import offers from foreign suppliers have driven LLDPE prices upward. Furthermore, increased demand from the downstream packaging and construction sector has further supported the price gains. However, despite the recent price surge, producers in the LLDPE industry remain cautious in their outlook. They anticipate no significant improvement in demand in the near to medium term and are hesitant to build up excess inventories for LLDPE.
Additionally, the European market faces disruptions in Asian-European shipping services due to the occurrence of typhoons in the Asian region. This natural phenomenon has led to temporary suspensions or delays in the transportation of goods between Asia and Europe, affecting the supply chain and potentially causing effects on LLDPE prices. Also, as the Chinese National Day holiday, known as Golden Week, approaches, there is a common trend of factory shutdowns and reduced production in China. This holiday period leads to a significant decrease in the demand for container shipping to and from Asia. Consequently, this reduced demand for shipping services may potentially impact the prices of LLDPE products in the short term, as it affects the overall supply chain dynamics.
According to ChemAnalyst, LLDPE prices are expected to move upward due to a surge in demand from the downstream sectors as the economy is expected to improve, leading to increased consumer purchasing activities in the European market. Further, the anticipated increase in feedstock Ethylene prices and higher prices for upstream Naphtha and Crude oil may impact the pricing trajectory of LLDPE in Europe.