European LDPE Surges After a Sudden Shift in the Global Trade and Prevalent Supply Constraints

European LDPE producers are targeting to introduce upward revision in their December LDPE pricing on the back of curtailed domestic production and buoyant domestic and export demand. Despite prevailing factors supporting upward price revisions, LDPE contract prices were seen resolutely low in early November but were seen edging higher by USD 36.48 per tonne later in the month.

LDPE stocks already available in the UK warehouses were heard being offered at around USD 1336/t amid anticipations that customers may have to pay an additional USD 230/t over the fourth quarter. A regional trader mentioned that upstream Ethylene producers are also planning to increase their monthly contract prices by USD 24/t, thereby adding to increased polyethylene rates. The shutdown of two crackers with a combined LDPE capacity of 500KTPA in Scandinavia, with one offline since April, has disrupted the overall trade. Furthermore, force majeures declared in November at a 400 KTPA plant in Wilton, UK and a 360 KTPA plant in Germany exacerbated the regional supply constraints. Fuming freight rates have further added to the worries of the buyers who have reported surging container costs from the Amsterdam-Rotterdam-Antwerp hub and unwanted delays in shipments to UK. The Shanghai Containerized Freight Index (SCFI) for Northern Europe and the Mediterranean jumped 21 percent and 22.6 percent in just a single week, amidst the shipping chaos in November. However, it is being said that European spot and contract prices are hovering way below most other regions with producers striving to push for further price increases in the near term.

According to ChemAnalyst,” as major shipping companies are flocking their cargoes to Americas after a recent uptick in the demand from the US, there has been a rapid rise in charges for cargoes shipping to Europe, Southeast Asia, etc. The situation seems not to ease before February next year and is indicative of uplifted margins across the global polymer industry for the next few months.”