For the Quarter Ending March 2022
North America
Metallocene Linear Low-Density Polyethylene (mLLDPE) market in the first quarter of 2022 witnessed a supply shock in the feedstock ethylene market as the region’s largest refinery at ExxonMobil’s Baytown facility in Texas caught fire in the last week of December 2021. Demand witnessed a sharp rise in the second week of February and the planned cost push of USD 0.1/lb by ExxonMobil, Lyondellbasell and Chevron Phillips had been implemented fully unlike the other polyethylene compounds where the producers were hesitant to hike their offers due to lower than expected demand and a highly volatile metals (rare earths and heavy metals) market which pushed up the prices of metallocene catalysts. The month of March saw prices stabilize after witnessing a sharp surge of USD 90/MT in the last week of February. The stabilization was mostly due to a softening in the ethylene monomer market driven by lowered Natural Gas Liquid prices (Propane and Ethane) and injection of new capacities, especially with the commencement of production at the SABIC-Exxon JV with a combined capacity of producing 1.3mn tons of LLDPE and m-LLDPE per year that diluted the supply crunch in the month of March.
Asia Pacific
Chinese mLLDPE market saw prices surge in the third week of January on the back of supply shortages due to the Chinese government’s strict covid 19 protocols that caused a significant amount of production to go offline as well as delayed container transit in to and out of critical container terminals such as Ningbo and Shanghai. Imports from the Korean Peninsula, India and the US found it hard to make their way into the domestic market. After a temporary slump in demand in the first week of February at the onset of Lunar new year holidays, demand finally grew stronger by the last week of February as the start of war in eastern Europe prompted buyers, mostly downstream moulders, and extruders to stock up their inventories in expectation of higher feedstock monomer prices.
India saw comparable price trends during the quarter ending March. Gas Authority of India Limited had been continuously revising its prices upwards since the beginning of the new year as supply from the oversees market was hit due to disruption in global supply chains during the initial phase of the new wave of pandemic. Demand from the flexible packaging industry had been strong throughout the corner.
Europe
European mLLDPE production during the quarter ending March had come under extraordinary pressure from disruption of natural gas supplies during the first half of the quarter. European natural gas demand rose sharply during the peak winter season, add to that, the lowered flow rates of Natural gas through the Nord Stream and Yamal pipelines, the two most important feed streams to North-West Europe, operational costs for the European manufacturing community have already been unfeasible by the first half of Q1 of 2022. The onset of war between Russia and Ukraine has further deteriorated the crisis, especially for the upstream ethylene producers as most naphtha crackers were rendered inoperable due to tighter naphtha crack spreads translating into negative Ethylene-Naphtha spreads. Benchmark Ethylene spot prices assessed on an FD North-West Europe basis have seen a whopping 32% rise between 25th of February and 17th of March. Standard LLDPE film prices for northwest Europe for Q1 of 2022 averaged around Euro 2000/MT. Supply tightness is expected to persist in the European mLLDPE market at least until the first half of Q2 2022.
For the Quarter Ending December 2021
North America
Metallocene LLDPE (mLLDPE) market struggled to make head way all through the second half of FY21 as demand struggled to gather momentum during Q4 as well. The demand from the overseas market too had been lower as exorbitant freight costs had rendered the imports into Northeast Asia unviable. Although ethylene spread had narrowed to an annual low by the end of November, it was not enough upward pressure on the prices. New capacities have been added during the tail end of December as the new joint venture between SABIC and ExxonMobil had added 1.3 Mn Metric Tons of LLDPE and mLLDPE to the existing production capacity in US.
The outlook for Q1 of FY22 remains positive as shoots of recovery could be seen from the closing weeks of January as the present pandemic situation had disrupted the logistics networks globally and could likely persist till the end of January. Spot prices could see an improvement from the last week of January while the meagre 0.04 USD/lb increase for January contracts announced in December had no effect on prices. The February contracts could be significantly higher, but the spot traded prices may not feel the price push as more production capacities and a less severe winter this time around could see the markets flush with the product.
Asia
Asian m LLDPE market during Q4 witnessed a supply tightness due to high freight costs and the shortage of coal supplies which led to an energy crisis in China. Exorbitant freight costs during the October to November season had an impact on the import supplies from India and the U.S. Although the energy crisis eased out by the last week of November FY21, thanks to a government intervention, most polyethylene and polypropylene manufacturing in China is still dependent on coal as energy source and the supplies of coal had been diverted towards power generation rendering production cuts at most PE and PP plants.
India too faced a similar situation with coal shortage from the tail end of October and continuing till the first week of December FY21. The prices of mLLDPE had seen an increase of 10% from the Q3 prices assessed on an Ex-Location (Delhi-NCR) basis. Although prices were revised downwards by RIL, Haldia petrochemicals and Opal in the month of December ahead of the holiday season, prices are expected to get an upward thrust from early January as a result of pandemic related production disruption combined with a general rise in demand.
Europe
Demand for mLLDPE from the domestic market saw a slight decrease from the Q3 levels. Production levels in Q4 of FY21 were around 80-90% of the Q4 of FY20 levels. The price of metallocene LLDPE on an average saw marginal decline of 2% from the Q3 price when assessed on an FD Hamburg basis. Demand -Supply fundamentals deteriorated to the end of December as major exporters in Europe such as Belgium and Netherlands struggled from the drop in demand from the East Asian markets during December as the new wave of pandemic led to a disruption of logistic networks. Ethylene to mLLDPE spread improved by the closing weeks of December as manufacturers found it hard to improve margins.
The outlook for Q1 of FY22 remains bullish as European energy demand increase during the peak winter season resulting in an increase in prices of Natural Gas which is also an upstream for the Ethane steam crackers. The impact of the pandemic may offset the increase in demand in the month of January FY22.
For the Quarter Ending September 2021
North America
In the North American region, the prices of mLLDPE witnessed wide range of fluctuations in Q3 reflecting the fluctuations in the spot prices of upstream Ethylene. Strong demand from the downstream packaging industry in Q3 to an extent neutralized the downward impact from free-falling prices of feedstock ethylene since the last week of August. Demand is likely to increase ahead of the Christmas season in Q4 which may keep the prices afloat despite consistent downward pressure from low raw material costs.
Asia
The prices of mLLDPE rose effectively in the Asian market during the third quarter of 2021. In India, a shortage of mLLDPE was observed during Q3 after declined output by major manufacturers like RIL and GAIL which shook the mLLDPE market and led to a steep rise in its pricing across the country. CFR JNPT mLLDPE offers skyrocketed from USD 977/MT to USD 1320/MT from July to September. However, demand fundamentals remained optimal in the meantime to support this upward price trajectory. Moreover, post ease in lockdown restrictions across major states of the country coupled with upcoming festive demand further affected the overall pricing trend of mLLDPE in Q3 2021.
Europe
During the third quarter of 2021, an unprecedented surge in energy costs affected Europe’s PE markets that have been facing other setbacks driven by the other variants of the pandemic. Several producers increased their market prices addressing the sudden and abrupt hikes in natural gas and electricity prices leading to a significant erosion of margins in Q3. Import prices were unworkable as a result of soaring freight rates, while logistical backlogs put players off guard from engaging in distant cargoes.
For the Quarter Ending June 2021
North America
mLLDPE prices showcased firm sentiments during this quarter backed by sturdy offtakes from the domestic market of USA. During Q2 2021, Ethylene prices rose effectively, on the back of rising demand from the packaging sector of USA. Sharp economic rebound after rapid vaccination drive and increase in the global demand, eventually increased the consumption of Polyethylene (PE) resins in USA including LLDPE and mLLDPE. In addition, rising crude oil values also increased the prices of downstream derivatives, which also exacerbated the overall price trend of the product across USA. Moreover, it was observed that rise in prices of PE resins affected the prices of downstream packaging sector and ultimately affecting most of the essential daily commodities in the country.
Asia
During Q2 2021, Asia witnessed overall dull markets sentiments during this quarter due to inadequate offtakes from the downstream sector. In China, demand from the domestic market remained modest. Therefore, no significant change in price of mLLDPE was observed during this quarter. Meanwhile in India, prices of mLLDPE declined affectively due to dented demand after unprecedented surge in new pandemic cases, which muted the demand for most of the polymers for at least two months in the country. However, during the other half of June, traders anticipated a rebound in the domestic market, as the country started recovering from the pandemic.
Europe
European market experienced a spike in prices of most of the PE products during this quarter, as the demand improved month over month, but availability remained insufficient to satisfy the overall demand. Under the prolonged curtailed supply activities of feedstock Ethylene, due to unplanned turnarounds across Europe and USA, prices kept on rising for PE resins including LLDPE, HDPE and mLLDPE. This rise in prices raised concern among the small and medium enterprises of the region, as they had to cut their margins to run businesses.
For the Quarter Ending March 2021
North America
North America experienced rare climate calamity in Q1 that paralysed the production activity of the US gulf coast during this quarter. Prices of most of the chemicals and polymers skyrocketed across the region due to firm demand from domestic as well as international markets. mLLDPE prices also shot up during this period, extending effect of the same reasons while demand from the downstream packaging sector was effectively high. In addition, demand from Asia and Europe for raw materials was also on its peak. Moreover, according to an estimation, more than 75% of upstream output was terminated by this freezing fallout which pressured the regional mLLDPE supplies.
Asia
The Asian market showed mixed sentiments about the price of mLLDPE throughout the quarter, whereas month over month prices were fluctuating within a narrow range. While there was critical shortage of upstream chemicals in the international market after the US gulf outages, the demand temporarily was concentrated towards essential and versatile materials like other alternatives of mLLDPE. However, talking about the overall growth in prices, a substantial growth of 3% and 1.17% was observed in India and China respectively. Thus, under stable demand from the downstream packaging sector, prices of mLLDPE rose effectively and settled at USD 1381/MT and USD 1033.5/MT for China and India respectively during March 2021.
Europe
The demand for mLLDPE remained high in the European countries in midst of low supply of feedstock chemicals across the region. There were several reasons behind this shortage, one of them being low supply of raw materials from the US gulf coast, and the other was unplanned force majeure by some plants due to halted raw materials supply after unfavourable weather conditions across Europe, which generated a serious logistics problem across some countries. Thus, in effect of high demand and low supply activity, prices traced upward trajectory throughout the quarter.
For the Quarter Ending September 2020
Asia
mLLDPE supply in the Southeast Asian market remained limited throughout the quarter on the back of the extended plant outages and supply constraints from its major exporters based in the US, due to temporary outages caused by Hurricane Laura. As several plants in Southeast Asia announced maintenance turnarounds in the middle of the quarter, the region marked limited shipments of cargoes in the September end. Many international suppliers were heard closing their contract deals after the weeklong mid-Autumn in the nation. Despite the supply shortage, many buyers in the region refrained from entering into any new spot deals. In India, mLLDPE prices on CFR JNPT basis for the quarter ending September 2020, were averaged around USD 1011 per MT.
North America
Although Hurricane Laura severely affected the revenues of majority of the Gulf coast mLLDPE producers, but the export potential of the region was not hindered immediately as several producers had stocks available for catering to the international demand in the short term. The stock level gradually dropped amid slow production from the plants that resumed production after a prolonged production turnaround. Demand appeared promising with increased consumption of product in the packaging sector following extensive demand for plastic packaging amidst coronavirus uncertainty.
Europe
Limited imports from Asia and US hindered the supply fundamentals of mLLDPE in the European market. Several downstream producers were heard purchasing the cargoes at a premium rate to prevent any hurt to the consumer sentiments amidst firm demand for packaging material. Demand is likely to stay strong till the next quarter due to the prevailing optimism due to the scheduled launch of COVID-19 vaccine by year end. Supply for various Polyethylene is also anticipated to retrace its pace after the scheduled resumption of various manufacturing units presently under production turnaround.
