For the Quarter Ending June 2024
North America
In Q2 2024, the Metallocene Linear Low-Density Polyethylene (mLLDPE) market in North America experienced a notable downward pricing trend, primarily influenced by several key factors. A surplus in supply coupled with subdued demand from critical downstream industries such as construction, packaging, and automotive applied significant downward pressure on prices. This overabundance of inventory, driven by a well-maintained production rate amid adequate feedstock availability, led to aggressive price competition among suppliers.
Geopolitical tensions and fluctuating crude oil prices further exacerbated market instability, influencing feedstock Ethylene costs and consequently suppressing mLLDPE prices. Focusing on the USA, which saw the most substantial price shifts, the overall market demonstrated a consistent bearish trend.
Seasonality played a role, with the onset of the summer construction season failing to bolster demand as anticipated. Instead, high inventory levels and logistical challenges, including supply chain disruptions, contributed to the declining price environment. Overall, the pricing environment in Q2 2024 was decidedly negative, dominated by a persistent decline driven by supply-demand imbalances, logistical inefficiencies, and external economic factors.
APAC
In the second quarter of 2024, mLLDPE pricing in the Asia-Pacific region exhibited a trend of rising prices. This increase was predominantly driven by several critical factors, including elevated upstream crude oil prices and escalating freight rates, despite stable feedstock Ethylene prices. Supply constraints due to ongoing plant maintenance and logistical challenges, such as container shortages and vessel booking difficulties, further exacerbated cost pressures. Additionally, energy costs remained high, contributing to the overall upward pricing momentum. These elements collectively created a challenging market environment, impacting both supply and delivery schedules. Focusing on Japan, which experienced the most significant price fluctuations, the overall trend reflected an increasing sentiment. Seasonality played a role, with demand from the downstream construction and automotive sectors bolstering prices. Despite these opposing forces, the market has witnessed a decline by quarter end. Concluding Q2 2024, the price of mLLDPE-FOB Qingdao in China declined by 1% in June 2024. Overall, the pricing environment in Q2 2024 for mLLDPE in the APAC region, has been characterized by an increasing trend, reflecting the complex interplay of supply constraints, logistical challenges, and sustained demand from key industries.
Europe
Q2 2024 has been a challenging period for mLLDPE in the European region, characterized by consistent downward pressure on prices. The market faced a confluence of factors that led to price depreciation. Subdued demand from downstream industries, such as construction and automotive, played a critical role in the overall price decline. This lackluster demand was further compounded by high inventory levels, resulting in an oversupply situation despite periodic disruptions in logistical channels, such as those stemming from severe weather events in Germany. Additionally, competitive pressures from increased global exports, particularly from the USA and the Middle East, exacerbated the supply glut, while economic uncertainties and rising inflation in the Eurozone curbed consumer confidence and spending. Germany, experiencing the most significant price fluctuations, exemplified these dynamics. The overall trend for mLLDPE in Germany during Q2 2024 has been predominantly negative, with prices exhibiting a marked seasonality downturn. This consistent depreciation underscores a bearish market sentiment driven by external economic pressures and internal market dynamics, suggesting a period of recalibration may be necessary for future stability.
For the Quarter Ending March 2024
North America
The first quarter of 2024 has witnessed a significant increase in mLLDPE prices in the North American region. Several factors have contributed to this upward trend. The market has experienced robust demand from various sectors, including construction and packaging, driving prices higher.
The demand for mLLDPE in the USA remained strong, driven by both domestic and international buyers who have been gradually adjusting to the upward trend in prices. Producers continued to limit the availability of spot prime material, redirecting excess supplies to the robust export market. Trading of polyethylene was brisk, with spot availability tightening and prices steadily increasing, fueled by the unrelenting demand from the export market willing to pay higher prices for resin while absorbing surplus supplies.
The mLLDPE market in the USA appears poised for a rally, with international resin prices on the rise, supported by escalating overseas freight costs. US producers not only benefit from a feedstock cost advantage but also enjoy favorable geographic positioning, resulting in cheaper and quicker freight options when shipping resin to Europe and the East Coast of Latin America. These regions are particularly affected by logistics constraints in the Red Sea and Panama Canal, enhancing the competitiveness of US resin in these markets.
APAC
mLLDPE pricing in the APAC region for Q1 2024 has remained stable, with no significant fluctuations observed across the market. Several factors have influenced market prices during this quarter. The stability in prices can be attributed to a balanced interplay between supply and demand forces. Despite challenges such as limited polyethylene (PE) offers from the Middle East and destocking pressures faced by petrochemical enterprises, traders have successfully maintained price stability. Demand from downstream sectors such as construction and packaging has remained steady, showing no significant rise compared to previous weeks. In China, the market has seen the maximum price changes compared to other countries in the APAC region. Throughout the quarter, mLLDPE prices in China have remained relatively constant, with a 2% increase compared to the same quarter last year. The percentage change from the previous quarter in 2024 was recorded at 0%. The first half of the quarter saw a 1% increase in prices compared to the second half. The latest quarter-ending price for mLLDPE in China was USD 1290/MT FOB Qingdao. Overall, the pricing environment for mLLDPE in the APAC region during Q1 2024 has been stable, with prices showing minimal fluctuations. This stability can be attributed to consistent demand from downstream sectors and a balanced supply-demand dynamic.
Europe
The Metallocene Linear Low-Density Polyethylene (mLLDPE) market in Europe during Q1 2024 has witnessed increasing prices and stabilized by quarter end, reflecting a positive pricing environment. Several factors have influenced market prices, including the supply-demand dynamics, economic conditions, and geopolitical tensions. Despite these challenges, the mLLDPE market in Europe has shown resilience. In the mLLDPE prices have experienced significant fluctuations, with an overall upward trend, which can be primarily attributed to challenges faced by European traders, exacerbated by disruptions in the Red Sea. These disruptions not only elevate shipping costs but also introduce delays, leading to a shortage of shipping capacity as vessels endure prolonged stays at sea. The increasing container rates, combined with shipping companies' reluctance to guarantee space, further compounds logistical hurdles. Despite this, demand from the downstream construction industry has remained sluggish due to the persistently gloomy construction sector. Further, the repercussions of the logistics crisis extend beyond immediate challenges, dampening prospects for recovery in 2024. Furthermore, high feedstock Ethylene costs and a surge in upstream Naphtha prices during this period have supported the trajectory of mLLDPE prices.
For the Quarter Ending December 2023
North America
In the final quarter of 2023, mLLDPE prices in North America underwent fluctuations, starting with an upswing in October but ending with a depreciation by the conclusion of the quarter.
The initial October price surge was propelled by escalating Ethylene prices and robust demand from the construction, packaging, and automotive sectors. However, November and December witnessed a decline in mLLDPE prices in North America due to diminishing Naphtha and Crude oil prices, coupled with subdued global market demand.
Despite maintaining stability in the domestic market, there was a reduction in export demand for mLLDPE from Asian traders, while inquiries from Latin America and Europe continued at reduced levels. In November, export offers began to emerge, prompting certain producers to adjust their prices downward to align with the softer international sentiment influenced by the decline in Crude Oil prices. Additionally, there were observed supply disruptions as low water levels in the Panama Canal imposed restrictions on the number of ships permitted to cross.
APAC
During Q4 of 2023, the mLLDPE market in the Asian region experienced a downward trajectory. However, the Indian market displayed a contrasting trend, rebounding by the quarter's end due to robust demand. The overall market dynamics were influenced by international Crude oil prices and weakening support for the product on the cost side. The supply of mLLDPE remained moderate, while demand fluctuated between moderate to low, creating a subdued transaction atmosphere. The decreasing price of feedstock Ethylene played a role in the diminishing trend and alleviated cost pressures on the product. Furthermore, the Chinese market, being a significant consumer, faced lackluster demand from downstream sectors such as construction and packaging. This prompted market participants to make adjustments to their prices in response to prevailing market conditions. In contrast, the Indian market exhibited an opposing trend, experiencing an upward trajectory by the end of the year. The 3% increase in mLLDPE CFR JNPT prices was primarily driven by heightened demand in the domestic market and increased freight rates. Meanwhile, the price of mLLDPE FOB Shanghai in China declined by 3% in October and stabilized by the conclusion of the quarter.
Europe
Throughout the fourth quarter, the European mLLDPE market faced a challenging demand scenario, briefly witnessing an increase in October followed by a decline for the rest of the quarter. The initial uptick in October was noted in the European PE market, attributed to limited imports from Asia and the Middle East. Sources within the market indicate that European PE producers have grappled with significant cost pressures over an extended period, compounded by weak demand fundamentals that have adversely affected their profitability. As November and December unfolded, the European market experienced a decline in mLLDPE prices, primarily influenced by subdued demand in downstream industries such as packaging and construction. The construction sector in the Eurozone contracted overall, particularly in France and Germany, where the latter witnessed its most substantial output drop in over three and a half years. The housing sector continued to be the underperforming sub-sector for the fifteenth consecutive month in November, marked by diminishing new orders due to weak demand conditions, leading to job cuts and a negative outlook for future output. Input costs saw an accelerated increase, prompting construction companies to implement cost-cutting measures in response to the challenging market conditions.
For the Quarter Ending September 2023
North America
In the third Quarter of the year, mLLDPE prices within the North American market exhibited a fluctuating trend, primarily influenced by shifts in demand and market dynamics. The Quarter began with a price decline in July, mainly driven by the diminishing trend in feedstock prices, particularly due to the devaluation of Naphtha prices. Further, persistent inflation and higher interest rates negatively impacted consumer spending patterns, subsequently reducing inquiries from downstream sectors like packaging and construction. As of August, prices found stability primarily due to the consistent demand originating from the downstream construction sector. Furthermore, despite supply disruptions caused by the hurricane season and the ongoing backlog of ships at the Panama Canal, the availability of sufficient stock prevented mLLDPE prices from experiencing significant changes. In September, there continued to be ample stocks of mLLDPE available to satisfy the existing demand. This encouraged producers to maintain their prices at a lower level in September. Consequently, mLLDPE prices remained steady throughout the month, offering a contrast to the earlier price fluctuations experienced initially in the Quarter.
APAC
During the third Quarter of the year in the Asia-Pacific region, the mLLDPE market displayed diverse patterns. Initially, there was a decrease in prices, which was followed by a significant surge, ultimately reaching USD 1334/MT FOB Shanghai (China) by September 2023. The price drop in July was primarily a result of a combination of weak demand and a surplus supply of mLLDPE in the market. The economic slowdown has led to lackluster demand from sectors downstream, like packaging, construction, and automotive industries. However, in August and September, mLLDPE prices began to increase, which was linked to the higher cost of its feedstock Ethylene. This cost escalation was driven by the increasing prices of upstream Naphtha and Crude oil. One significant factor contributing to this price trend was the heightened demand for mLLDPE in the domestic markets of India and China, propelled by the upcoming festival season and increased industrial activities. Additionally, stable inventory levels within the region created a positive sentiment in the market, suggesting that the mLLDPE sector may continue to see upward momentum in the near term.
Europe
Throughout the third Quarter of 2023, the European market for mLLDPE experienced price fluctuations, primarily influenced by shifts in demand and variations in feedstock Ethylene costs. In July, prices underwent a decline, and a stable trend was observed in August; however, as the Quarter concluded, mLLDPE prices surged. The initial price decrease in July was attributed to sluggish demand from downstream industries, likely due to factors such as summer holidays, elevated living expenses, and unfavorable macroeconomic conditions. These factors curtailed consumer spending and consequently impacted demand. By the middle of the Quarter, mLLDPE prices stabilized as market dynamics showed minimal fluctuations and demand remained moderately low. Nevertheless, as the third Quarter concluded, mLLDPE prices rebounded. This primarily resulted from a decrease in material supplies due to reduced output rates at regional plants and limited import offers from foreign suppliers. Furthermore, increased demand from the downstream packaging sector further supported these price gains. Additionally, Eurostat data revealed a decline in European industrial activities in the previous month, with a 1.1% decrease in Industrial Production output for the Euro Area in August 2023. This trend continued into September, reflecting consistent market sentiments. In contrast, Industrial Producer's Prices demonstrated significant improvement, increasing by 0.6% in August. This shift affected goods consumption in September, influencing pricing dynamics within the European PE market.
For the Quarter Ending June 2023
North America
During the Q2 of 2023, mLLDPE prices have shown a decline in the US market. The main factor behind the decrease in the unimpressive demand from the downstream packaging, automotive, and construction sectors. Further, the abundant supply of the product, combined with subdued demand due to inflationary pressures and higher interest rates, has impacted the price trend for mLLDPE in North America. The market transactions were mainly on a needs-on-demand basis. Also, the regional banking turmoil had an impact on the downshift observed in the price realization of mLLDPE in the domestic market. Furthermore, the cost pressure from the feedstock Ethylene was limited as its prices progressed downward, as reported by the market participants. The feedstock Ethylene showed mixed market sentiments as the price inclined by 13% in April while falling by 12% for the next two months of the Quarter. Additionally, a plant shutdown of the feedstock Ethylene unit was reported as Chevron Philips Chemical, located in Cedar Bayou, Texas, USA, had an unplanned shutdown on 14th June 2023, with a production capacity of 1.7235 million mt/year.
APAC
The price of Mlldpe witnessed mixed sentiments during the Q2 of the year 2023 as the prices inclined initially and in mid-quarter but declined by the end. The MLLDPE FOB Shanghai prices in China inclined by 1% in April. However, they dropped by 4% in June. The increased prices of feedstock Ethylene has influenced the price trend for mLLDPE in the Asia-Pacific region. The prices decreased by the end of the Quarter due to reduced demand from the downstream packaging industry amid market uncertainties and the slowdown in the Chinese economy. Mitsubishi Chemical, a feedstock Ethylene plant shutdown, was reported for maintenance turnaround by the end-May 2023. The plant is located in Mizushima, Japan, with a plant capacity of 570,000 mt/year. Another Ethylene plant shutdown was seen as PetroChina Liaoyang Petrochemical was shut for maintenance turnaround from mid-April to early June. The plant is located in Liaoning, China, and has a production capacity of 200,000 mt/year. YNCC, Ethylene plant was shut for maintenance shutdown on 24th April 2023 till early June for a maintenance turnaround. The plant is located in Yeosu, South Korea, and has a capacity of 90,000 mt/year.
Europe
Throughout the second Quarter of this year, the mLLDPE market has seen a decreasing trend in Europe. The decrease in prices resulted ssfrom a drop in demand from industries further down the supply chain and an abundant supply of the product in the market. The decrease in demand was influenced by inflationary pressures and the impact of the Russia-Ukraine war on market dynamics. Consumers have been displaying a careful approach to making purchases due to uncertainties in the market. Further, the feedstock Ethylene and upstream Naphtha's declining prices have impacted the price trajectory of mLLDPE. The feedstock Ethylene prices declined by 13% by the end of the Quarter, thus supporting the declining prices of mLLDPE. 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.
For the Quarter Ending March 2023
North America
mLLDPE prices have remained largely stable in the US market during the first quarter of 2023, with limited fluctuations observed. Stable to weak demand dynamics from packaging and other industries coupled with sluggish feedstock prices resulted in steady mLLDPE prices. Upstream Natural gas and crude oil prices declined sharply in this quarter as all the predictions and forecasts regarding the sharp jump in energy prices fell flat, resulting in snug cost pressure. Meanwhile, the economic slowdown and threatening recession kept the consumption levels below the normal rates, which culminated in ample material availability amid stable production rates from major manufacturers. Thus, after the conclusion of the first quarter, mLLDPE prices were assessed at USD 1390 per MT on a FOB basis.
APAC
In the Asian market, major polymers remained lackluster for a major part of the quarter owing to weak demand dynamics amid strong supply dynamics in the global market, and the case of mLLDPE has been no different. mLLDPE prices continued their bearish trend throughout the first quarter on the back of firm inventory levels available with the market participants due to steady production rates and weak demand from packaging and other allied industries. The PE market has been on a consistent decline in the past quarters, and market participants expect that prices have bottomed out and may improve in the upcoming quarter. Thus, as of March 2023, mLLDPE prices were assessed at USD 1310 per MT on a FOB basis.
Europe
In the European market, mLLDPE prices remained largely on a bearish trend throughout the first quarter, owing to ample material availability in the domestic market and weak demand from the downstream industries. Meanwhile, several countries in the European continent witnessed labor strikes and shortages which disrupted the supply chains; however, a drop in demand resulted in a limited impact on the prices of several commodities, including polymers. However, the market observed optimism towards the latter half of March 2023 as feedstock prices improved while demand sentiment also witnessed some light. Thus, as of March 2023, mLLDPE prices were assessed at USD 1505 per MT.
For the Quarter Ending December 2022
North America
During the fourth quarter of 2022, the prices of mLLDPE plunged in the North American region with a fall in feedstock Ethylene market value. Not only was there less activity as a result of low demand, but sellers also withdrew their offers as a result of lower producer operating rates. Weak demand from both domestic and foreign markets due to the poor performance of downstream industries has led to a low-demand situation in the US. LLDPE also dropped in the US as the rising value of US currency made other exports from various countries attractive to importing countries. The easing feedstock Ethylene prices in the US market and reduced production cuts have impacted the market fundamentals of mLLDPE in the fourth quarter of 2022.
Asia
The market prices of mLLDPE plummeted in the Asian market during the fourth quarter of 2022, with a sluggish procurement from the downstream packaging sector. The purchase from the end-use sector seemed to be falling, and the market operated at low levels. In addition, higher stockpiling of the product with the traders and suppliers in the regional market was observed. Supply chains from China, Japan, and Taiwan have remained stable, resulting in plenty of material available on Indian shores. Truck drivers' strikes have occurred in South Korea, but the impact on material availability has been limited as demand dynamics remain sluggish. In the meantime, traders report a decline in product inquiries.
Europe
The prices of mLLDPE moved in a downward see-saw direction during Q4 of 2022, as per ChemAnalyst Research Team Data. Upstream Ethylene prices in the Asian market have also remained lower than the domestic prices as demand from downstream industries remains sluggish. In the polyethylene and glycol chain industries, unfavorable market conditions resulted in a sharp drop in ethylene demand. As another reason for the price drop, the manufacturer decided to sell Ethylene even at a lower price to destock their current stockpiles, weakening the market sentiments for mLLDPE. As far as domestic production is concerned, operating rates remained under control amid weak demand dynamics from downstream industries. With no major port congestions in Europe, supply chain dynamics have improved. As a result, imports and inter-European transportation have eased in Q4-end.
For the Quarter Ending September 2022
North America
The prices of mLLDPE (metallocene Linear Low-Density Polyethylene) declined consistently throughout the penultimate quarter owing to ample inventories and weak demand from the downstream industries. Demand for thermoplastics remained sluggish during the quarter due to weak consumption rates from packaging and other industries. Meanwhile, production rates remained stable as the feedstock prices declined in the third quarter. Several ports in the US faced port congestion, specifically on the Gulf Coast and East coast. However, port congestions have a limited impact on the market dynamics as the global demand sentiment remained sluggish throughout the quarter. Thus, after the conclusion of Q3, mLLDPE prices were assessed at USD 1695 per MT on a FOB basis.
Europe
The European thermoplastic market remained sluggish throughout the third quarter of 2022 owing to weak packaging industry demand, and mLLDPE followed similar market dynamics. The performance of the polymer industry remained under pressure because the speculations of a European recession engulfed the market resulting in weakened consumer sentiment. The inventories of Polyethylene and Polypropylene remained high as weak consumer sentiment offset the volume intake, which prompted the manufacturers to decrease the production rates amid rising production costs due to high energy prices. Meanwhile, the imports from the Asia Pacific increased, compensating for the production cuts by the European manufacturers. Thus, mLLDPE prices declined in Q3 and settled at USD 1735 per MT on FD basis.
Asia-Pacific
The prices of mLLDPE (Metallocene Linear Low-Density Polyethylene) in the Asia Pacific region have shown mixed sentiments owing to fluctuating market fundamentals. mLLDPE prices rose at the beginning of the third quarter due to firm demand dynamics and weak inventory levels due to sluggish procurement in the earlier quarter. However, demand dynamics declined in the middle of the quarter, which resulted in a drop in prices during August. The market fundamentals improved in September as the market participants looked to procure the material ahead of the festive season and holiday season in the South Asian market. In the Indian market, mLLDPE prices were assessed at USD 1655 per MT on Ex-location basis.
For the Quarter Ending June 2022
North America
The North American countries had been experiencing surging mLLDPE prices in April and May, which was attributed to stout demand for this product from downstream industries and increasing feedstock prices. An increase in global freight costs also played a role in determining the prices. However, the markets experienced a downfall in the month of June. In Canada and United States, the prices dropped due to reduced costs of feedstocks, followed by reduced orders for this product from companies for several production purposes. Mexican markets are too aligned with that of the US and Canada.
APAC
The price trend of Metallocene Linear LLow-DensityPolyethylene (mLLDPE) remained the same all over Asia–Pacific in the second quarter. In China, the prices remained idle till May, due to lockdowns imposed in various provinces, yet there was stable demand for this product from downstream processing industries. However, in June, the prices dropped due to lower feedstock costs, influenced by the reduced crude oil prices and lowered demand for mLLDPE. Japan, too followed a trend identical to that of China. In India, the prices remained firm in April and May due to sturdy demand for this product; however, the prices dropped in June because of reduced feedstocks costs and poor demand for mLLDPE.
Europe
In the second quarter, the European markets also appeared uniform with North American and APAC markets. When it comes to Germany and France, growing feedstocks prices, along with expanding demand for mLLDPE kept the market growing till May and the downfall in June was observed due to weakened Euro against US dollar, followed by reduced ethylene costs, which was credited by lowered crude oil prices. Another factor which attributed to the reduction was the poor demand for this product, as the suppliers and companies had purchased this product in excess, in the earlier months. Like other European countries, the United Kingdom too followed a similar trajectory in this quarter.
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.
