Quarterly Update on HDPE (High Density Polyethylene) Market
For the Quarter Ending June 2021
HDPE prices shot up this quarter across North America, backed by huge spike in demand from downstream packaging sector. Major plant turnarounds during previous quarters, lowered down the inventory levels, where the demand suddenly recovered in April and May. Major manufacturers kept on releasing previous orders, and fresh order had to wait until the closure of deliveries. Following the material shortage, major producers ExxonMobil, Equistar, Dow and Chevron Phillips increased their HDPE prices during the month of April and May. Thus, prices of HDPE revolved around USD 2155/MT for injection moulding grade and USD 2278/MT for blow moulding grade during the last week of the quarter in USA.
Asia witnessed dull market sentiments oh HDPE during this quarter, where buying momentum remained low that pressured its prices. In China, lower buying activities under ample inventory level led to continuous slips in prices of HDPE in the country. New capacities commissioned during April-end, including China's Lianyungang Petrochemical (subsidiary of Zhejiang Satellite Petrochemical) and Huatai Shengfu's new 400 KTPA HDPE unit and 400 KTPA LLDPE/HDPE units respectively. While in India, under strict COVID measures imposed by government to curb on pandemic, demand for HDPE tumbled amid stable production activities in the country. Therefore, prices of HDPE (Injection Moulding grade) settled at USD 1283/MT and USD 1211/MT in India and China respectively during the 4th week of June.
Due to considerable shortage of HDPE in Europe and America, prices of HDPE shot up to an extreme height during this quarter. European buyers faced difficulties to procure HDPE in their respective country, as extreme shortage of several resins including HDPE led to delayed shipments. Low container availability also exacerbated the price hike across the region, where rising freight remained another concerning factor. Thus, in the midst of stable demand outlook, buyers were ready to pay premium on early cargoes, which made prices to rise during this timeframe.
For the Quarter Ending March 2021
North American polyolefins manufacturers experienced huge and rare weather abnormality, that reduced the production of HDPE to negligible. Winter storm across the US gulf coast totally disrupted the production activities of almost all the plants across the area. More than 80% of olefins and polyolefins plants remained idled for almost two months from early February till mid of March, during this period FOB prices of HDPE rose by 30% and settled at USD 1520/MT in Texas. By the end of the quarter, supplies started healing and more than 50% plants came back to operations, but due to limited availability of feedstock monomers and additives, production of HDPE remained low.
The Asian market registered steep rise in prices during this quarter amid firm demand and lower availability across the region. The demand fluctuated throughout the quarter, and hence the prices also remained unstable. During February and March, prices of HDPE rose rapidly due to severe global shortage of feedstock chemicals in effect of major plant turnaround across US gulf. Like in China, EXW Jiangsu (China) HDPE price rose by 7.28% within the quarter, which was also an outcome of the reduced production rate during Chinese Lunar Holidays in February. In addition, several domestic plants in China like Sinopec Maoming, Sinopec Yanshan, and PetroChina Sichuan idled for plant maintenance activities by the end of March.
Disrupted plant operations across the US Gulf coast stirred the availability of polyolefins including HDPE in the Middle Eastern countries. Due to these situations global polyolefins prices soared to its peak, which were further supported by recovery in global crude oil prices. Besides, Mehr petrochemical, a major HDPE manufacturer of Iran, resumed their production activity of a plant with capacity of 300,000 MT/year, which was shut down a week before due to technical glitch.
For the Quarter Ending September 2020
Asian HDPE market sentiments fluctuated in a narrow range amidst consistent demand and ample supply. As restricted cargoes from Iran were discharged in September, it flooded the market with abundant product volume. China appreciably bounced back from the pandemic blows with the Polyethylene demand reaching pre lockdown levels due to active downstream market. In contrast to improved offtakes from China, negligible change was observed in the Southeast Asian region as it tumbled against the cold waves of the economic imbalance caused by the Coronavirus contagion. However, if demand fundamentals remained strong in next quarter, the regional HDPE market could showcase a substantial gain in the near term.
Coronavirus strengthened the Q2 demand outlook of the North American HDPE market, majorly driven by strong packaging demand from food, medical and healthcare industries. Supply tightened as the country witnessed delayed deliveries followed by scarce resin availability. In September, the exports reduced by a prominent percentage as an outcome of the force majeures implied against Hurricane Laura. Although the demand from other sectors such as construction, automotive and agriculture considerably improved but were still low compared to the pre lockdown levels.