US LLDPE Market Surges Amid Arctic Blast and Supply Disruptions
US LLDPE Market Surges Amid Arctic Blast and Supply Disruptions

US LLDPE Market Surges Amid Arctic Blast and Supply Disruptions

  • 02-Feb-2024 3:55 PM
  • Journalist: Robert Hume

The US Linear Low-density Polyethylene (LLDPE) market witnessed a surge in buying activities in January 2024, driven by heightened consumer demand. Market participants observed a notable increase in LLDPE transactions, with buyers showing increased interest and readiness to make purchases in the new year. The surge in LLDPE prices during this period was linked to supply chain disruptions caused by the Arctic Blast, which brought freezing temperatures to the US, as well as disturbances in the Panama Canal and Suez Canal. Additionally, the upward trajectory of upstream Crude oil prices played a role in influencing production costs, particularly affecting the costs of feedstock Ethylene. This rise in production expenses put pressure on LLDPE prices, contributing to the overall trend of escalating costs in the LLDPE market. Furthermore, robust demand from downstream packaging and construction industries was observed in both domestic and overseas markets, particularly in Asia. These factors have overall contributed to an increase of 2% for LLDPE Film Butene based grade FOB Texas during is period.

The increased demand for LLDPE was fueled by the Arctic Blast that affected the United States, resulting in frigid temperatures and disruptions across various sectors. The Port of Houston, a crucial shipping hub, faced temporary closures, leading to a backlog in deliveries. Production outages occurred due to widespread flaring of feedstocks at various plants and minor equipment issues, further impacting the supply chain for commodities. Moreover, ahead of the frigid conditions, some Ethylene producers opted to reduce rates or temporarily shut down operations. LyondellBasell, a major player in the industry, reportedly reduced rates at all its US Gulf Coast crackers. INEOS, with two crackers in Chocolate Bayou, Texas, also reduced rates in anticipation of the freeze. Chevron Phillips Chemical, operating six crackers, confirmed rate reductions at all its plants and undertook furnace decoking measures in preparation for adverse weather conditions. Additionally, Nova Chemical's merchant ethylene cracker in Geismar, Louisiana, shut down in anticipation of the freeze which was originally scheduled for a planned turnaround on January 19, the company decided to initiate the turnaround a few days earlier than planned. These preemptive measures taken by ethylene producers to mitigate the impact of the freeze on their operations contributed to the overall supply chain disruptions and subsequent increases in LLDPE prices.  Despite these challenges, the export market for LLDPE remained strong in Asia, driven by the Lunar New Year. Disruptions in shipping routes, including the Red Sea and the Panama Canal, caused supply displacement, resulting in elevated freight rates.

Furthermore, the energy sector played a significant role in influencing LLDPE prices, with an increase in upstream Crude oil prices attributed to reduced domestic production amid severe winter storms. Additionally, Crude oil prices rose indicating a more significant-than-expected decline in US crude stockpiles. Simultaneously,  the ongoing tensions in the Middle East impacted Crude oil prices, affecting Naphtha and feedstock Ethylene production costs, ultimately leading to an upswing in LLDPE prices.

According to ChemAnalyst, the forecasted pricing trend for LLDPE suggests a bullish trajectory in the upcoming period. This anticipated surge in prices is attributed to increasing upstream prices and heightened freight rates resulting from supply chain disruptions in the Panama Canal and Suez Canal. Additionally, there is an expectation of a rising trend in feedstock Ethylene prices, potentially exerting cost pressures on the product.

Related News

Dow-Mitsui Polychemicals Setting the Standard with ISCC PLUS Certification
  • 24-Jun-2024 9:01 PM
  • Journalist: Harold Finch
Global LLDPE Market Faces Varied Trends Amid Supply Chain Disruptions
  • 21-Jun-2024 6:25 PM
  • Journalist: Jung Hoon
LLDPE Faces Divergent Trend as Europe and US Markets Dwindle with Asia Sustaines Stability
  • 03-Jun-2024 3:53 PM
  • Journalist: S. Jayavikraman
Global LLDPE Market Dips Amid Excess Supply and Low Demand in April 2024
  • 22-Apr-2024 6:15 PM
  • Journalist: Jung Hoon