Quarterly Update on Global LDPE (Low Density Polyethylene) Market
For Quarter Ending June 2021
Recovery from pandemic revived market sentiments for North American resin manufacturers during this quarter. Demand remained strong enough to the prices, while filling the old enquiries. Major manufacturers like ExxonMobil, Equistar, and Chevron Phillips increased their LDPE prices by USD 110/MT during May, to improve margins under high demand and rising upstream and production cost. Therefore, an effective rise in prices of LDPE was observed during Q2 2021, which revolved around USD 1955/MT for film grade in USA during in end of June 2021.
Lacklustre demand of LDPE amidst stable supply led to dull market sentiments across APAC region during this quarter. Major players of China revealed that they had ample stock availability during this quarter, while they struggled to get proper queries, leading to a fall in prices. Meanwhile Indian manufacturers witnessed fair demand for most of the resins including LDPE initially during April. Later, due to sudden surge in pandemic cases and implementation of movement restrictions, overall demand for LDPE from packaging sector fell. Therefore, demand remained bearish throughout the quarter in India amid ample inventory level, and prices slipped from USD 1808/MT to USD 1534/MT for adhesive film grade during April-June timeframe in India.
Europe faced huge supply crunch for several polymer resins during the first half of the quarter, that led it to a sharp spike in price of LDPE across the region. This supply crunch was supported by lower import activities from USA and Asia due to several reasons. Low availability was the result of prolonged plant outages across Europe and the Gulf coast of USA during the previous quarter, along with container shortages across Europe-Asia trade route. In addition, soaring resin prices concerned several MSME businesses of Europe, who were already battling with the losses.
For the Quarter Ending March 2021
The North American market experienced high demand for LDPE from the local as well as international market during Q1 2021. The production levels were totally disrupted due to winter storm which also created shortage of the feedstock Ethylene. Shortage of feedstock Ethylene forced several plants to shut their production and raise the regional offers. Formosa Plastics USA shut its LDPE plant due to the shortage of Ethylene during January although they resumed the activity soon after a week. The production capacity of this plant is 400,000 MT per year. These shortages and unplanned shutdowns accelerated the prices of LDPE 2 years high during this period. LDPE Film Grade FOB Texas price surged above USD 1800 per MT in March. Freezing cold snaps slumped manufacturing activities in Louisiana and Texas which is the base for many industries that turn oil to polyethylene. With more than 75 percent of Ethylene production affected by the storm, prices of almost all Polyethylene products were raised by double digits between mid-Feb and March.
In the Asian market, demand for LDPE remained weak to moderate and also the availability remained low due to lesser imports. Prices of LDPE fluctuated continuously throughout the quarter, due to unsteadiness in the demand-supply situation. In India, the average prices of LDPE film grade rested at USD 1608 per MT in February. Chinese Lunar holidays reduced the demand for days, as the manufacturers shut their operations during this period. In addition, during the end of march several plants in China went for maintenance shutdown, including Sinopec Moaming with capacity of 250,000 MT per year and Sinopec Yanshan with capacity of 380,000 MT per year.
In Europe, LDPE demand remained moderately positive, and prices remained consistently high due to lower imports and insufficient production. Imports from the US were negligible due to severe winter storm which disrupted the production activity across the region. Lower imports and higher domestic and international demand led the prices to rise steeply. In addition, Sumitomo has licenced out high pressure LDPE & EVA production process to Russian producer to establish a new LDPE & EVA production plant in Kazan.
For the Quarter Ending September 2020
The Asian LDPE sentiments improved appreciably in the third quarter on the back of strong demand from the downstream sectors as buyers who previously stopped purchasing cargoes on demand disruptions caused by coronavirus paved their way back into the market. As the consumption of packaging and pipe demand increased with seasonal peak in September and October, fundamentals of LDPE traced further recovery with revenues surpassing pre-lockdown levels. However, several turnarounds in North Asia and Middle East kept the market under pressure from the supply side.
A number of unprecedented turnarounds and force majeures along the US Gulf Coast as a ripple effect of Hurricane Laura led to shortage of LDPE supply in times of its surging demand. Export potential of the region was also curtailed by limited availability of the material. The demand outlook remained healthy with prominent recovery expected in the electronics sector followed by continuous increment in packaging demand as people are keener towards home take away of food as an effect of changing lifestyle after the coronavirus.
Beginning of the third quarter in the Middle East was pressured by tightened LDPE supply due to prolonged maintenance outages by some of the leading producers in the region. Demand from food packaging and hygiene applications remained robust with increasing consumption for single use packaging items and disposable plastic sheets. Export revenues also witnessed substantial gains by the end of September, as restriction concerning the travel and trade were lifted across several countries.