European R-LLDPE Market Grapples with Decline Amidst Oversupply

FOB Hamburg: In the European Recycled Linear Low-Density Polyethylene (R-LLDPE) market, diminished demand from key recycling sectors has triggered a ripple effect, declining downstream industrial production and manufacturing activities in the third week of November 2023. Challenges arise from decreasing price support for scrap LLDPE materials and rising post-consumer product collection rates, hindering sustainable market growth for recyclers. The weakening PMI index adds complexity to the market landscape. On the supply side, an oversupply situation, ample inventories, and bearish price pressure result from increased import cargoes. Despite robust demand from the automotive and electronics sectors, the overall contraction in consumption, coupled with reduced energy costs from weak crude oil and natural gas prices, shapes a challenging market scenario.

In the European market, the R-LLDPE sector is experiencing the impact of reduced demand from major recycling industries such as Packaging and Construction. This influence has set off a series of reactions within the market. The decline in industrial production and manufacturing activities has decreased R-LLDPE demand from these vital sectors. Furthermore, the R-LLDPE market faces challenges from the dwindling price support for scrap LLDPE materials and the mounting rates of post-consumer product collections. These intricate market dynamics have created significant hurdles for recyclers aiming to attain sustainable market growth. Additionally, the weakening PMI index has shadowed the overall market's growth prospects, adding another layer of complexity to the market landscape.

The oversupply situation in the local market, driven by the unchanged production capacity of R-LLDPE material, has maintained a bearish tone, challenging suppliers to manage excess inventory effectively. The R-LLDPE market experiences downward price pressure due to an influx of import cargoes, influencing a slower pace in the spot market. Enterprises prefer immediate stock procurement over bulk purchasing, contributing to muted trading activities and persistent oversupply. Despite robust demand for R-LLDPE from the Automotive and Electronics sectors, overall consumption faces a deep contraction, failing to offset weak demand from downstream Packaging and construction industries. This complex dynamic results in challenges for suppliers, navigating a market influenced by both oversupply and specific sector weaknesses.

In addition, continuous weakness in the Crude oil and Natural gas prices have also lowered the overall energy cost, consequently decreasing the overall production cost. The easy availability of scrap LLDPE material in the region makes it favorable and cheaper for the recyclers to process R-LLDPE pellets, thus forcing suppliers to provide discounts on their stocks to sell products.

ChemAnalyst forecasts anticipate a continuing declining trend in the forthcoming weeks. The R-LLDPE market is particularly influenced by diminished demand from key recycling sectors, impacting industrial activities and hindering sustainable growth for recyclers. Oversupply, unchanged production capacity, and increased import cargo may further exert bearish pressure on R-LLDPE prices. Moreover, continuous weakness in Crude oil and Natural gas prices further lowers energy costs, contributing to an overall decline in production costs of R-LLDPE; these factors support this trend.