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R-LLDPE Market Faces Downturn Amid Oversupply and sluggish downstream Demand
R-LLDPE Market Faces Downturn Amid Oversupply and sluggish downstream Demand

R-LLDPE Market Faces Downturn Amid Oversupply and sluggish downstream Demand

  • 27-Dec-2023 2:50 PM
  • Journalist: Jai Sen

Ex-Riyadh: In the Arabian Recycled Linear Low-Density Polyethylene (R-LLDPE) market, an ongoing trend of declining prices persists, driven by challenges related to the diminishing price support for scrap LLDPE materials and the increasing rates of post-consumer product collection. These factors pose obstacles to the sustainable growth of R-LLDPE recyclers. The market landscape is further complicated by a marginal weakening in the Purchasing Managers' Index (PMI). On the supply side, an oversupply situation of R-LLDPE, coupled with ample inventories, and subdued procurement activities from overseas markets during the current seasonal phase, contribute to weakened export dynamics. Suppliers are responding with consistent discount offerings to incentivize larger volume purchases. However, the downstream industry is grappling with heightened freight rates with increased shipping cost, prompted by security concerns following attacks by Yemen’s Houthi militants on commercial vessels in the Red Sea. Consequently, the European R-LLDPE market remains stable, reflecting the impact of elevated import costs for the product.

The Arabian market is grappling with an oversupply scenario, sustained by an unaltered production capacity of R-LLDPE material, which has established a bearish sentiment. This situation poses a challenge for suppliers in effectively managing excess inventory. The R-LLDPE market faces downward price pressure attributed to weakened product procurement activities during the Christmas holidays, influenced by reduced downstream industrial production and manufacturing activities for the final finished product with fewer staff members available during the holiday season. Enterprises are leaning towards immediate stock procurement rather than engaging in bulk purchases, contributing to subdued trading activities and the persistence of oversupply. The intricate interplay of these factors presents challenges for R-LLDPE suppliers, navigating a market influenced by both oversupply and specific weaknesses within certain sectors.

In the European market, the R-LLDPE sector is experiencing the impact of reduced demand from major recycling industries such as Packaging and automotive parts manufacturing industries. However, during the third week of December R-LLDPE prices remained steady due to rising import cost, but at its lower end. This influence has set off a series of reactions within the market. The reduction in industrial production and manufacturing activities has led to a decline in R-LLDPE demand from these pivotal sectors. These intricate market dynamics present considerable challenges for recyclers striving to achieve sustainable growth in the market. Furthermore, the absence of changes in the Purchasing Managers' Index (PMI) has cast a shadow over the overall growth prospects of the market, introducing an additional layer of complexity to the market landscape.

The Arabian R-LLDPE market is anticipated to face continued challenges in the forthcoming weeks. The persistent oversupply situation, coupled with weakened demand during the Christmas holidays, is likely to maintain a bearish trend. Suppliers will grapple with excess inventory as industrial production and manufacturing activities remain subdued. Furthermore, uncertainties in shipping routes due to geopolitical events are expected to hinder export activity. In the European market, the R-LLDPE sector may see further pressure from reduced demand in key recycling industries, exacerbating the struggle for recyclers amid declining price support and post-consumer product collection rates. The overall market landscape remains complex and challenging.

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