For the Quarter Ending June 2023
North America
The price of Linear Low-Density Polyethylene (LLDPE) has shown a declining trend throughout the second quarter of 2023. The primary reason for the decrement is the lackluster demand from the downstream packaging and construction industries. The ample availability of the product coupled with subdued demand due to inflationary pressures and increased interest rates has influenced the price trajectory for the LLDPE in North America. The price of Film Butene-based grade FOB Texas has witnessed a decline of 2%, 4%, and 7% in April, May, and June, respectively. However, the feedstock Ethylene showed mixed sentiments as the price inclined by 13% in April while falling by 12% for the next two months of the quarter. Furthermore, the plant shutdown of the feedstock Ethylene unit was reported as Chevron Philips Chemical, located in Cedar Bayou, Texas, USA, and had an unplanned shutdown on 14th June 2023. The plant has a capacity of 1.7235 million mt/year. However, any major impact of plant shutdown was not observed in the price of the product in the US.
APAC
During Q2, the LLDPE market has seen a bearish trend in the Asia-Pacific region amid an economic slowdown and lackluster demand from the Chinese market. The demand from downstream packaging, construction, and automotive industries was observed to be sluggish due to market uncertainties caused by inflation and geopolitical tensions across the world. Further, the feedstock Ethyleen and upstream Naphtha price fluctuations have also supported the price trend for LLDPE. The price of LLDPE in Singapore has a decline of 4%, 1%, and 5% in April, May, and June, respectively. Sinopec SABIC Tianjin, LLDPE plant was shut down for maintenance turnaround on 10th June 2023 for a week. The plant is located in China and has a capacity of 300,000 mt/year. Another plant shutdown was reported as the PetroChina Lanzhou LLDPE plant located in China was shut down for maintenance turnaround on 11th June 2023. The duration cannot be ascertained, while the plant has a capacity of 300,000 mt/year. Pengerang Refining and Petrochemical (PRefChem) was shut down for maintenance turnaround from Mid-May to Mid-June. The plant is located in Pengerang in, Malaysia, with a plant capacity of 350,000 mt/year.
Europe
Throughout the second quarter of this year, the LLDPE market has seen a decreasing trend in Europe. The decline in prices was due to reduced demand from downstream industries and ample availability of the product in the market. The slump in demand was observed on account of inflationary pressure and the effects of Russia-Ukraine on market dynamics. Consumers have shown a cautious attitude toward making purchases due to market uncertainties. Further, the feedstock Ethylene and upstream Naphtha's declining prices have influenced the price of LLDPE. The inflation rate in the Euro area, as per Eurostat data, was 7.0% in April, 6.1% in May, and estimated to be 5.5% in June for the same month in the previous year. Although inflation rates were declining, the recession still affected the economy and market dynamics. The decline in LLDPE price in the UK was 1% in all three months this quarter. In Italy, the LLDPE price fell by 1% in the first two months while it fell by 3% in June 2023.
MEA
LLDPE prices continued to decline in the Saudi Arabian market throughout the second quarter of 2023, supported by weak demand and adequate availability of the product. The downward progression of prices for feedstock Ethylene during the specified period has resulted in insufficient cost pressure. Also, the declining prices of upstream Naphtha have impacted Ethylene and LLDPE prices. On the demand side, inquiries from the downstream packaging and construction industry have been weak. Further, the demand from overseas has declined due to market uncertainties across the global market. The price of LLDPE decreased by 6% in April, while a decline of 3% was seen by the end of the quarter. General Authority for Statistics (GASTAT) issued on its official website the results of the Industrial Production Index (IPI) for April 2023. The IPI increased by 3.2% in April 2023 in Saudi Arabia. A plant shutdown was reported in Saudi Arabia as Sabica Petrokemya, LLDPE plant was shut down due to maintenance turnaround from End-May 2023 till Early-June 2023. The plant capacity is 400,000 mt/year.
South America
Throughout the second quarter of this year, the Linear Low-Density Polyethylene (LLDPE) prices have declined in South America on account of lackluster demand from the downstream packaging, construction, and automotive industries. The primary cause for the unfavorable purchasing sentiments could be attributed to the economic slowdown following the US banking crisis, along with ongoing inflationary pressure and volatile market dynamics. Further, the ample supply of the product amid subdued demand had led to increased inventories, and manufacturers had to keep the prices low to avoid overstocking the product. The feedstock Ethylene and upstream Naphtha decreased prices over the quarter, had also supported the sink in prices of LLDPE. The price of LLDPE Film grade CFR Santos in South America fell by 3%, 4%, and 8% in April, May, and June, respectively. As per Institute for Supply Management (ISM), the manufacturing PMI index was 47.1 in April, 46.9 in May, and 46 in June, indicating contraction in the manufacturing sector in the US.
For the Quarter Ending March 2023
North America
LLDPE prices have shown fluctuation in the USA market during the first quarter of 2023. During January, LLDPE prices gained a downtrend due to dull buying sentiments and ample supply in the domestic market. Feedstock Ethylene prices have dropped, which resulted in the low production cost of LLDPE in the domestic market. Furthermore, demand from the downstream packaging, the film industry, has remained sluggish as consumer sentiments continue to remain weak in the US region amid ongoing holidays. In addition, sufficient inventories in the domestic market force the manufacturer to revise their negative price quotation. Although, during February and March, LLDPE prices gained upward stability due to improved consumer sentiments. Furthermore, demand for LLDPE from the downstream industries packaging along film industries has remained stable in the domestic market. Thus, prices of LLDPE Butene-based Grade FOB spot Texas were settled at USD 1268/MT during March 2023.
Asia- Pacific
LLDPE prices have showcased an oscillating trend in China during the first quarter of 2023. During the initial of Q1, LLDPE prices declined by 3.3% due to weak demand from the downstream industry and adequate supply in the domestic market. In addition, operating rates have remained weak in the domestic market due to sluggish consumption from the downstream industry. Feedstock Ethylene prices have dropped, which resulted in the low production cost of LLDPE in the domestic market. However, during mid of Q1, LLDPE prices gained upward momentum as market participants replenished the material available in the domestic market. Although, demand from the downstream industries has risen at a slower pace. In addition, the PetroChina plant in Yulin, China, shut down its LLDPE in February plant due to maintenance turnaround, which further impacts the prices of LLDPE in the domestic market. However, the dropped in the procurements from the downstream packaging and film industry, along with ample inventories, forced the manufacturer to decrease their LLDPE prices. Thus, the slowdown in demand and sufficient stockpiles resulted in the price fall towards the end of Q1. Therefore, prices of LLDPE Extrusion coating FOB Shanghai were assessed at USD 1252/MT during March 2023.
Europe
LLDPE prices showed mixed sentiments in the European market during the first quarter of 2023. In the first two months of 2023, LLDPE prices have dropped due to sluggish demand from downstream packaging industries amid ongoing holidays in the European markets. Additionally, imports into the European ports have been steady, as demand in the Asian market remains sluggish, and Asian exporters are taking advantage of better arbitrage opportunities by sending material onto European shores. As a result, there is ample material availability in the regional market, owing to firm imports and stable production rates. However, towards the end of Q1, demand from the downstream food and liquid packaging increased, which resulted in the high prices of LLDPE in the regional market. Thus, prices of LLDPE FD Hamburg were assessed at USD 1564/MT during March 2023.
A dropping price pattern for LLDPE was seen in the USA during the fourth quarter of 2022, which is quite similar to the decline in LLDPE prices in the US during Q3 2022. The steady decline of LLDPE prices on a monthly basis in the US during the third quarter continued during the fourth quarter also because of the high availability of the material amidst poor demand. The lowering price trend of the US LDPE during Q4 2022 was unaffected by the varying upstream Ethylene price. Prices for the product in the US decreased as a result of weak downstream demand and ample availability of the material in the country.
With the exception of the Chinese market, where prices of Linear Low-Density Polyethylene (LLDPE) increased in the final month of the fourth quarter of 2022, Asian markets witnessed dropping LLDPE prices throughout Q4 2022. The main factors that caused the prices of LLDPE to fall during Q4 2022 were unfavorable economic conditions in China, the world's largest importer, and subpar performance in the downstream industries in several Asian countries. However, a little increase in the price of LLDPE was observed in the Chinese market at the end of Q4 2022 owing to a sudden increase in demand in the Chinese market as well as a marginal increase of around 0.5% (during October-November) in upstream Ethylene prices.
In the first month of Q4 2022, there was a small fall in LLDPE prices in the European region due to the weak demand from the downstream industries. The domestic markets' weak downstream packaging demand was the primary driver of LLDPE's downward price trend. In spite of the weak demand forecast for LLDPE in Europe, prices increased in the final two months of Q4 2022 as stocks in the European region started to decline and the high input costs, such as energy and the rising price trend of upstream Ethylene, started to catch up with the manufacturers in the European region.
