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Weak Downstream Demand Depresses the Global Low-Density Polyethylene Prices

Weak Downstream Demand Depresses the Global Low-Density Polyethylene Prices

Weak Downstream Demand Depresses the Global Low-Density Polyethylene Prices

  • 31-Aug-2022 6:00 PM
  • Journalist: Harold Finch

Several disruptions, such as extreme weather conditions in China, transportation issues in the USA, and lower water levels in the Rhine, have boosted the global economic challenges and squeezed the market fundamentals of various commodities, including Low- Density Polyethylene. As per the latest insight, Prices of Low- Density Polyethylene (LDPE) have perceived a downward trend across the global market. The primary factor for the price drop was sufficient inventories and weak demand from the end-user sector.

In China, sufficient inventory level coupled with limited inquiries from the downstream packaging and plastic industries has resulted in the price drop of Low- Density Polyethylene in the domestic market. Consequently, Low-Density Polyethylene prices were quoted at USD 1585/tonne during the week ending 26th August. Moreover, one of the manufacturers of Low- Density Polyethylene, Shenhua Xinjiang Energy, in Xinjiang (China), having a capacity of around 270,000MT/year, has shut down its plant due to maintenance, which also impacts the prices of the Low- Density Polyethylene in China.

In addition, with a perfect balance between supply and demand, India's Low-Density Polyethylene (LDPE) price has been rolled over. In addition, manufacturers have sufficient availability of the product to cater to the domestic demand. As a ripple effect, prices of Low-Density Polyethylene Liquid Packaging were assessed at INR 127940/tonne in the domestic market.

At the same time, in Germany, the declining demand from the downstream market is rumbling the European Low-Density Polyethylene sectors. Despite the fluctuation in naphtha prices, Low- Density Polyethylene prices saw a downward movement as geopolitical instability and record-high inflation keep demand below seasonal expectations. Hence, as a result, Low-Density Polyethylene prices were assessed at USD 1945/Tonne in the week ending 26th August.

Meanwhile, in the US, an increase in supply and weak demand dampened producers' opportunity to raise prices in August. On the raw material front, fluctuations in crude and Naphtha values in the Ethylene market further supported the downtrend of the regional cost of Low-Density Polyethylene. Moreover, downstream plastic and food packaging industries were operating cautiously according to the end user's requirements. Consequently, prices of Low-Density Polyethylene were offered at USD 1635/tonne during the same time frame.

According to ChemAnalyst estimation, the "price of Low- Density Polyethylene will witness a bearish trend triggered by a decline in the raw material Ethylene cost. Meanwhile, high energy cost and inflation rate have dampened the demand from the downstream packaging industries".

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