Global LDPE Market Faces Downturn Amid Oversupply and Weak Demand in April 2024

In the first half of April 2024, oversupply conditions led to a downturn in the global Low-Density Polyethylene (LDPE) market. Despite higher April contracts for LDPE in Europe, sentiment remained steady as demand tapered off following a three-month uptrend. Similarly, the Asian market saw a moderate to declining trend due to ample supplies. To account for the shorter working days during Ramadan and Eid-ul-Fitr holidays, many Middle Eastern producers decreased their April offers, resulting in price reductions in both Asia and Europe.

The European LDPE prices declined by about 1% during H1 of April, mainly due to weak domestic demand and surplus supply.  Manufacturers encountered challenges in adjusting prices to match production costs amidst a slow market, leading to cost pressures. Despite feedstock Ethylene costs on the rise, many suppliers opted to lower prices due to better availability. The drop in LDPE prices in April was driven by increased availability and a shift in the supply-demand balance, which favored buyers. While some suppliers initially aimed to maintain stable prices, they ultimately had to decrease them due to consumer resistance and reduced shipping expenses.

In the first week, the prices remained stable, however, LDPE prices was on a decline in the second week, now dipping below Europe's spot ranges. This, combined with the shortened month of April, might impede sellers' efforts to recoup margin losses. Despite the increase in Crude oil prices prompted by supply concerns, the global LDPE markets continue to experience subdued demand from downstream construction, automotive, and packaging sectors. Market participants foresee pressure on regional LDPE markets due to the shortened holiday month and incoming imports. Buyers are anticipating reduced prices in May and June, potentially resulting in discounts later in April.

Moreover, European producers are anxious about the uptick in LDPE imports from Asia, notably from China, which could worsen the supply buildup amid economic uncertainties. This pressure is anticipated to endure, particularly with the potential influx of Chinese LDPE into European markets, while the US maintains its position as a significant supplier, benefiting from its feedstock advantage and oversupply situation.

During this period, LDPE prices have remained relatively steady in the Asian market, particularly in China and India, since late March, due to subdued activity and ample domestic supply putting pressure on the market. Furthermore, rising Ethylene costs have prompted local sellers to increase their prices in the Asian market. However, stagnant demand in India and a lack of supply issues across the region may keep market sentiment restrained in the short term, according to market players. Nevertheless, the upward trajectory in oil prices is expected to offer some support to the LDPE market despite reduced purchasing interest in the region.