Quarterly Update on Global mLLDPE Market
For the Quarter Ending June 2021
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.
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.
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 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.
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.
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
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.
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.
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.