The Economic Slowdown and Demand Destruction Weigh on German LDPE Prices
- 24-Aug-2022 5:20 PM
- Journalist: Francis Stokes
The war between Russia and Ukraine has been dragging on for the past six months, and no signs of the conflict abate. Also, Europe's economy has grappled with recessionary trends due to the regional energy crisis. The slowdown in economic growth across the European region has dampened demand from the end-user sector, which drags the prices of polymers and their raw materials across the European market.
According to ChemAnalyst latest assessment, prices of Low-Density Polyethylene (LDPE) have gained downward momentum in the German market due to the weak raw material Ethylene cost in the domestic market. As per the data, German's manufacturing activity has contracted abruptly, as the cost-of-living crisis forced the consumer to curtail spending while supply constraints continued to hurt manufacturers. Besides, Purchasing Managers Index (PMI) has plunged from 49.9 to 49.2 compared with the previous month.
At the same time, in the German market, packaging and plastic industries have been protracted; thus, the demand for Low-Density Polyethylene remained lackluster, leading to a straight and steady fall in the product's prices. Hence, German manufacturers don't have any option but to curtail costs to clear inventory and create space for new season output. Moreover, several market participants revealed that the buyers shift from contractual volumes to the spot market on the crest of falling demand. Hence, as of result, Low-Density Polyethylene FD Hamburg prices were quoted at USD 1950/MT with a weekly declination of around 1.0% during the same time frame.
According to the ChemAnalyst estimation, "prices of Low- Density Polyethylene (LDPE) will likely follow the downward trajectory in the upcoming weeks due to the low raw material Ethylene cost. Meanwhile, speculation of recession across Europe may diminish the demand from the consumer end."