For the Quarter Ending September 2023
North America
LDPE prices in the third quarter exhibited a fluctuating pattern, primarily influenced by the movements in feedstock Ethylene prices and market dynamics in North America. Initially, during July, prices experienced a decline due to the impact of the decreasing feedstock price trend, driven by depreciating Naphtha prices. Further, the persistent inflation and higher interest rates negatively affected consumer purchasing behavior, consequently impacting inquiries from downstream packaging and construction sectors. However, as the quarter progressed, prices rebounded and eventually stabilized at USD 1289/MT Blowmolding grade CFR Veracruz (Mexico) by the end of Q3. This price upturn was primarily attributed to increased demand from the regional market. Furthermore, the escalating costs of feedstock Ethylene and rising Crude oil prices further fueled this price surge. Additionally, on September 14, 2023, Nova Chemicals had to declare a Force Majeure for HDPE and LDPE resins produced at their Ontario, Canada facilities. This decision resulted from an unexpected shutdown at their Corunna Cracker plant, which supplies Ethylene to the Moore and St. Clair sites.
APAC
In the Asia-Pacific region, the LDPE market exhibited varying trends during the third quarter, starting with an initial decline in prices but concluding in a substantial surge, reaching USD 992/MT Film grade FOB Jurong (Singapore) by September 2023. The price decline in July was primarily due to a combination of sluggish demand and ample supply of LDPE in the market. The economic slowdown led to lackluster demand from downstream sectors such as packaging, construction, and automotive industries. However, as August and September rolled in, LDPE prices began to rise. This uptick in prices was linked to the increased cost of its primary feedstock, Ethylene. The rising prices of upstream Naphtha and Crude oil drove this cost increase. One significant factor contributing to this price trend was the heightened demand for LDPE in the domestic markets of India and China, driven by the upcoming festival season and increased industrial activities. Additionally, stable inventory levels within the region created a bullish sentiment in the market, which suggests that the LDPE sector may continue to experience upward momentum in the near term.
Europe
Throughout Q3 of 2023, the European LDPE market remained in a bearish state, primarily due to weakened demand from downstream industries. The price of LDPE continued to decline, reaching USD 1342/MT Film FD Surrey (UK) by September 2023. The declining LDPE prices in Europe can be attributed to the persistently low prices of the feedstock Ethylene, which was a result of lackluster demand during the summer holidays in downstream industries. Several factors have contributed to this reduced demand, including reduced consumer spending, driven by the high cost of living and unfavorable macroeconomic conditions such as inflation and high-interest rates. Moreover, the decrease in infrastructure projects has further led to a decline in demand. Producers in the European LDPE market are cautious about future demand and do not anticipate significant improvements in the near term. Consequently, they are hesitant to accumulate excess inventory, leading to reduced plant production rates. Additionally, data released by Eurostat indicates that European industrial activities were on the decline, with Industrial Production output in the Euro Area remaining at -1.1% in August 2023 compared to the previous month. This aligns with similar market sentiments observed in September. On the other hand, Industrial Producers Prices saw an improvement to 0.6% in August, impacting the consumption of goods in September.
MEA
During the third quarter of 2023, the LDPE market displayed a mixed trend, influenced by varying purchasing sentiments from both the regional and overseas Asian markets. In July, LDPE prices in Saudi Arabia experienced a decline, primarily due to sluggish demand from downstream industries like packaging and construction. The falling prices of upstream Ethylene further contributed to the downward price trend. Inflation rates also weakened the confidence of domestic buyers, and demand for Saudi Arabia's LDPE in Asian countries, particularly India and China, remained low due to prevailing market conditions. However, in the last two months of the quarter, LDPE prices surged and reached USD 1043/MT Film grade FOB Al Jubail (Saudi Arabia) in September 2023. This price increase can be attributed to the rise in feedstock Ethylene prices, driven by the consistent increase in upstream Naphtha and Crude oil prices. Demand from downstream industries such as automotive and construction remained steady as inflation eased in August compared to the previous month, leading to healthier consumer buying sentiments. Additionally, the demand for Saudi Arabian LDPE from the Asian market was robust, further supporting the upward price trajectory of the product.
For the Quarter Ending June 2023
North America
The price of LDPE witnessed a bearish price trend in Q2 in North America. The decline was primarily due to lackluster demand from downstream industries along with ample availability of the product. Although the price of LDPE kept decreasing, feedstock Ethylene showed mixed sentiments as it increased by 13% in April but fell by 12% by the end of the quarter. Further, the primary reason for unhealthy buying conditions had been the slowdown in the economic conditions post the US banking crisis and persistent inflation with fluctuating market dynamics. The LDPE price fell by 3%, 4%, and 7% in the month of April, May, and June 2023, respectively. Furthermore, the plant shutdown of the feedstock Ethylene unit was reported as Chevron Philips Chemical, located in Cedar Bayou, Texas, USA, had 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 the second quarter, the price of LDPE declined continuously due to lackluster demand from the downstream packaging and construction industries. The upstream Ethylene and Crude oil decreased prices have further contributed to the slump in prices of LDPE. Furthermore, the reduced demand was seen on account of the economic downturn in the global market caused due to Russia- Ukraine war and weaker market growth in China post-lockdown restrictions. The decline of LDPE in Singapore was observed to be 7% in the last month of this quarter. LDPE plant shutdown was reported in China as PetroChina Lanzhou Petrochemicals, with a plant capacity of 200,000mt/year, was shut down for maintenance turnaround on 15th June 2023. Also, the feedstock Ethylene plant shutdown was in South Korea where Hanwha Total Energies Petrochemical, located in Daesan (South Korea) with a plant capacity of 1.55 million mt/year, was shut down for maintenance turnaround from the end of April to mid-June. Yeochun Naphtha Cracking Centre (YNCC), located in Yeosu (Soth Korea), shut down its Ethylene plant for maintenance turnaround from 24th April to early June.
Europe
Throughout the Q2 of this year, the LDPE prices witnessed fluctuations in the European region. The first two months saw a surge in prices while the prices declined by the end of the quarter. The feedstock Ethylene prices, however, have been weaker the entire quarter due to decreased demand in the global market. The demand for LDPE from downstream packaging, construction, and automotive industries was affected due to economic slowdown in the region and geopolitical tensions caused due to Russia-Ukraine war. The prices of Crude oil had also shown a weaker price trend affecting LDPE costs to decline by June. The price of LDPE in the United Kingdom (UK) increased by 5% and 2% in April and May, while a decrement of 1% was observed in June. The inflation rate in the Euro area, as per Eurostat, has been 7.0% in April, 6.1% in May, and estimated to be 5.5% in June with respect to the same month in the previous year. Although inflation rates were declining, the recession still affected the economy and market dynamics. The upstream Ethylene plant shutdown was reported in Germany. BASF plant was shut down for weeks on 9th June 2023 for two weeks for a maintenance turnaround. The plant is located in Ludwigshafen in, Germany, and has a plant capacity of 620,000 mt/year.
MEA
In the second quarter, the LDPE prices contracted in the Middle East Asian region due to market uncertainties. The major reason that caused a drop in LDPE price movement was the adequate availability of the stock amidst stagnancy in the production costs coupled with ease in the Crude oil prices. Further, the geopolitical uncertainties have placed pressure on the global demand for LDPE from downstream packaging and construction industries in Middle East countries. Furthermore, the upstream Ethylene prices have been observed to be declining throughout the second quarter. The prices of LDPE in Saudi Arabia fell by 11%, 4%, and 6% in April, May, and June. A similar declining trend was observed in feedstock Ethylene as it fell by 10% by the end of the quarter in June in Saudi Arabia. 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.
South America
In the second quarter of this year, Low-Density Polyethylene (LDPE) prices have decelerated in South America due to the sluggish demand from the downstream packaging and construction industries. The main cause of the unfavorable purchasing conditions could be attributed to the economic slowdown following the US banking crisis, along with ongoing inflation and volatile market dynamics. Further, the surplus supply of the product amid subdued demand had led to increased inventories, and sellers had to keep the prices low to finish their stock. The upstream Ethylene and Crude oil decreased prices over the quarter had also supported the sink in prices of LDPE. The price of LDPE Film grade CFR Santos in South America fell by 4%, 2%, and 7% in April, May, and June, respectively. As per Institute for Supply Management (ISM) data, the manufacturing PMI index has been declining, as 47.1 in April, 46.9 in May, and 46 in June, indicating contraction in the manufacturing sector in the US.
A decline in spot demand caused LDPE prices to fall in the US during the first quarter, and LDPE trading activity increased. Other processors may have just purchased the material as part of their routine business operations, while the more widespread purchasing may have been caused by late railcars that required immediate feedstock resin availability. Downstream LLDPE prices in the American market have continued the downward pattern because there have not been any notable changes in the local demand that have an effect on the final pricing. The Polyethylene scenario in the US market remained silent throughout the quarter. Offers for LDPE were there in the market but were met with uninterested buyers. The price of LDPE in the US was recorded at around USD 1388/MT.
Low demand for LDPE cargoes in the Asian nations that import it is a major element in the dip in the price range of LDPE, which led to a decrease in the material's price this quarter. The cost was estimated to be USD 1140/MT LDPE Film Grade CFR Busan in South Korea. The steady decline in upstream ethylene cost contributed to the falling price trend of LDPE in the South Korean market. LDPE prices decreased in the Asian market this week despite strong downstream buying activity. The main cause of the South-Eastern LDPE price trend's downward movement is the high exporting nations' supply rates as a result of the markets' dropping price trends. The demand for Polyethylene after the spring festival was not as high as anticipated, which is seen in the prices of LDPE in China during the latter weeks of February. LDPE prices in China were constant during this quarter. The restart of an upstream Ethylene plant in the Chinese market contributed to the consistent LDPE price trend.
Throughout this quarter, LDPE prices have been steadily falling on the European market as upstream Ethylene prices have come down as a result of the extremely low natural gas prices. The producers of LDPE did not wish to reduce the prices of LDPE in spite of the dropping costs and weakening demand in the European region, which led to a constant price trend for LDPE in Germany. As people started making purchases to meet summertime demands, LDPE prices rose in the UK. Additionally, as energy prices rose and demand from downstream industries in the European region increased throughout the summer, this was also true in the English market. Furthermore, The price of LDPE in the UK climbed during the last week of March despite declining ethylene costs throughout Europe due to increased demand from the downstream packaging sectors. Therefore, the price of LDPE hovered at USD1640/MT in the English market as of March 31, when LDPE prices climbed by 1.8%.
