Is Rising LDPE Prices in Europe the Start of the Comeback of the Polymers Market Globally?
- 18-Oct-2022 3:20 PM
- Journalist: Francis Stokes
Low-Density Polyethylene (LDPE) prices in various regions have begun to increase, while other polymers, like Polypropylene and Polyethylene (PE), such as LLDPE, have been relatively dull in the global market. The primary reason behind this price rise of LDPE is that the end-use pharmaceutical industry recovers faster from high inflation rates compared to the other polymers' end-use industries. Several European manufacturers have informed that energy surcharges would be added to LDPE prices, further abetting the price rises of LDPE in the global market.
While fundamentals are still weighing on LDPE prices, players now believe that higher production costs will prevent suppliers from offering even lower rates and even prompt them to cut fill rates. PE markets bottomed out, and despite a drop in upstream ethylene prices, LDPE prices were rising and clearly at a high based on recent historical data. However, these prices will remain the same as long as increasing energy costs and operating speed reductions are applied.
The price difference between Italy and other European countries this year is due to the limited availability of LDPE film feedstock in Europe. The strong exchange rate between the USD and Euro also contributes to the rise in LDPE prices. Although the LDPE market in Italy (and Western Europe) remains higher than other markets, the price gap has narrowed since May 2022.
According to ChemAnalyst, the demand for LDPE throughout this fourth quarter of 2022 in the Europe market is expected to be dull as it is visible as many downstream manufacturers report low order entries, blaming rampant inflation for the drop in consumer spending. Despite significant declines in the resin market, end-product prices remained high due to rising utility costs hurting consumption. Regional producers have begun to reduce their operating costs around the summer to rebalance supply and demand. Due to higher energy costs, more suppliers will likely run at lower rates until the end of the year. It is unlikely for any significant alteration to take place anytime soon.