European and Asian HDPE Markets Witness a Prices Surge, while US Sustains Stability in May

The global High-density Polyethylene (HDPE) market experienced a variety of trends during the previous week. While HDPE prices in Europe and Asia surged due to increasing freight rates, prices in the US remained stable. These fluctuations were primarily driven by subdued demand and limited supplies worldwide. Further, production costs were influenced by fluctuations in feedstock Ethylene prices and a decrease in Crude oil prices. Moreover, disruptions in major supply routes caused by geopolitical tensions exacerbated market pressures. Consequently, Injection FD Hamburg (Germany) prices for European HDPE rose by 1%, Chinese HDPE Injection Molding EXW Jiangsu (China) prices saw a minor increase of 0.4%, and USA HDPE prices remained steady for the week ending on May 24, 2024.

In Europe, the HDPE market experienced an upward trend driven by increasing freight rates, and low inventory levels in the regional market contributed to this rise. Further, higher costs of feedstock Ethylene supported the pricing of HDPE. However, demand from key sectors like construction, automotive, and packaging remained subdued in the domestic market. The surge in ocean freight demand from Asia, possibly signaling the start of a restocking cycle in Europe, along with North American importers accelerating their peak season demand due to concerns over labor issues or disruptions in the Red Sea later in the year, further strained the container market. This strain was worsened by the redirection of shipments from the Red Sea, leading to increased import costs of raw materials in Europe.

Throughout this period, HDPE prices in the US remained stable, reflecting balanced supply and demand dynamics. Polyethylene trading significantly improved compared to the previous week, with prices for the most commonly traded grades remaining steady as business operations returned to normal. Despite rising freight rates from Asia to the Americas and shipping delays, export demand remained robust. However, international buyers continued to resist price increases, making incremental export sales challenging despite steady prices and limited prompt availability. Moreover, although feedstock Ethylene prices were increasing due to rising upstream Naphtha costs, HDPE prices remained unchanged.

During this week, the Asian HDPE market maintained stability with a slight price increase, particularly noticeable in imported PE film grades which experienced consecutive rises over two weeks. This was fueled by a shortage of Middle Eastern origins and escalating freight rates. Despite a cautious increase in demand and the film industry entering its off-season marked by restocking and terminal inquiries, order transactions remained subdued, exacerbated by weak downstream demand. Furthermore, the recent decrease in Crude oil prices has impacted production costs, partly due to the high-interest rate environment in the United States, which has suppressed demand, alongside bearish US inventory data and decreasing geopolitical risk premiums. These factors highlight the balance in the HDPE market, where supply constraints and fluctuating external factors shaped pricing dynamics amidst subdued demand.