Steady mLLDPE Prices in Western Nations Amid Supply Chain Disruptions and Economic Factors
- 15-Sep-2023 3:02 PM
- Journalist: Francis Stokes
Metallocene Linear Low-Density Polyethylene (mLLDPE) prices in Western nations, including the United States and Europe, remained steady throughout August 2023. This stability in mLLDPE prices can be attributed to consistent demand from industries in the packaging, construction, and automotive sectors, coupled with ample stock to meet domestic market requirements. Several factors contributed to this price trend, such as sustained demand despite abundant supply and feedstock prices. Economic conditions and interest rates also influenced consumer sentiment, impacting mLLDPE prices.
In the United States, mLLDPE prices remained unchanged in August, following a previous decline in July due to weak demand and surplus inventories. Market participants were able to maintain price stability as new offers from producers were slow to arrive, as they preferred direct selling. Although feedstock Ethylene prices remained high due to increased Naphtha prices in the region, this did not significantly affect mLLDPE pricing. Furthermore, supply interruptions have been caused by the persistent congestion of vessels at the Panama Canal, leading to supply disruptions. The El Nino phenomenon, characterized by reduced water levels, has necessitated restrictions on the number of ships allowed to pass through the canal. Furthermore, the hurricane season has also impacted the product supply chain in the United States in August.
Additionally, US manufacturing continued to contract for the 10th consecutive month in August, though at a slower pace, suggesting a potential stabilization of the sector at lower levels. This directly influenced market dynamics in the US and mLLDPE consumption. Furthermore, sluggish demand from China, a major mLLDPE importer, affected US prices due to China's economic slowdown, reducing consumer consumption of mLLDPE.
Similar stability was observed in the European mLLDPE market in August, following a decline in the previous month. Germany's manufacturing sector, which plays a significant role in its economy, remained in a downturn in August due to weak demand and declining output. The European economy's impact on consumer sentiment also influenced mLLDPE prices, as demand remained moderately low in downstream construction and packaging sectors.
In La Cangrejera, Mexico, Pemex experienced an unplanned shutdown of its Ethylene cracker by the end of July 2023. The duration of this shutdown remains uncertain, and the plant's capacity is 650,000 mt/year.
According to ChemAnalyst, a price increase for mLLDPE in the United States and Europe is expected in the coming months. This price surge is anticipated to be influenced by growing demand from the US construction industry and the potential for improved economic conditions. The expected price increase in feedstock Ethylene and upstream Naphtha may also impact mLLDPE pricing.