Quarterly Update on Global Linear Low-Density Polyethylene (LLDPE) Market
For the Quarter Ending June 2021
LLDPE prices witnessed consistent rise this quarter in North America region, backed by lower availability and rising feedstock prices. Due to lower availability of several PE resins in the USA, prices increased effectively throughout the quarter supported by stable demand from downstream packaging sector of the country. Rapid vaccination drive, led to a rebound in production and consumption activities across the region, which eventually increased the consumption. In addition, rising upstream crude oil value amid increasing domestic consumption also concerned different sectors, as the prices of several downstream commodities were rising frequently. Therefore, after reaching a significant rise, price of LLDPE revolved around USD 1700/MT for film grade during the last week of June.
Asian LLDPE market remained largely dull during this quarter due to dented demand and ample stock availability. However, In China, marginal price improvement was observed for different grades of LLDPE due to rising upstream values and modest demand outlook in the country. While in India, prices kept drifting due to dented demand after unprecedented surge in COVID pandemic in the country. Therefore, prices of LLDPE were assessed at USD 1394/MT (Extrusion grade) and USD 1630/MT (High flow grade) in India and China respectively during the first week of June 2021.
Europe experienced huge spike in prices of several resins including LDPE and LLDPE during this period, supported by firm demand and inadequate supply activities across the region. Prices of several polymers kept rising, due to shortage of feedstocks caused by prolonged unplanned turnarounds across Europe and Gulf of USA. In addition, other factors like container shortage and other logistical issues exacerbated this rise.
For the Quarter Ending March 2021
In North America, prices of LLDPE skyrocketed during Q1 2021, due low supply across the region. Prices of LLDPE across the US market showed consistent hikes since Q4 2020. FOB Texas LLDPE film grade offers surged to USD 1185 per MT by the end of January, showing more than 29% hike than its Q4 2020 price. This extreme rise in prices was led by reduced domestic production activities and extreme shortage of Ethylene, due to winter storm across USA gulf region. The impact of Arctic freeze which took place in the second half of February were clearly visible in the country’s latest trade data. As per the stats from the US Commerce Department, USA polyethylene (PE) exports dropped from 937.5 KT in January to 742 KT tons in February 2021.
The Asian market experienced a bullish trend in the prices of LLDPE throughout the quarter. The trend was initiated due to low product availability as an effect of lower US imports and increased shipping container and freight prices across the region. The demand remained resolutely high from the packaging sector and a lot of desperation amidst buyers for securing supply could be observed in India and South Korea. PetroChina shut it LLDPE/HDPE plant of capacity 300,000 MT/year for the purpose of maintenance during the end of March, which ultimately reduced the total output of the region. In mid-February to March, several US converters reported low inventories as they were struggling to restart operations after the freeze fallout. This created global shortage of LLDPE which eventually led to rise in its prices across Asia. Like in India, average price of almost all LLDPE grades soured by around 12% within Q1.
The European market experienced rise in prices of several polymers including LLDPE, due to lower production and lesser imports. Surging global rates supported the uptrend in the regional prices. Imports from USA was reduced to negligible due to plant shutdowns amid rare winter storm across North American region, meanwhile Middle east increased their export prices of polymers to Europe to cater to its skyrocketing demand. Prices took an upwards rally backed by significant improvement in crude oil prices.
For the Quarter Ending September 2020
The Asian LLDPE market got hampered despite gradual pick up in the economy in the third quarter. The Southeast Asian plant capacities which were anticipated to come onstream by the second half of 2020 had to delay operations to 2021 due to economic fallout and overflowing inventories in China. While the plant deadlines seemed extended, demand outlook turned in favor owing to greater consumption by the food packaging sectors. Regional demand from the food packaging sector has risen almost around 15% from the last year’s as a greater population stayed at home this quarter. Players expressed concerns regarding overall production of Polyethylene in Southeast Asia post September due to major cracker turnarounds scheduled on cards.
North America stands behind Asia in terms of Polyethylene capacities. Supply remained tightened throughout July-Sep quarter with a number of planned and unplanned ethylene cracker outages as a large part of the region remained impacted with Hurricane Laura, which disrupted operations at several LLDPE plants, thereby restricting the availability of the product for longer than expected. LLDPE offers were raised substantially during the quarter with limited export activity and additional increases expected in the next two months. However, increasing competition between different grades and sellers is likely to put a cap on the LLDPE pricing in the region.