HDPE Prices Show Mixed Sentiments in US and Europe Amidst Fluctuations in Demand

The High-Density Polyethylene (HDPE) prices in the US and European markets exhibited mixed market sentiments for the H1 of September 2023 due to the varying demand pattern in these two weeks. The HDPE market sentiments were impacted by feedstock Ethylene prices upstream Crude oil and the demand from the downstream industries. The supply disruptions due to plant shutdowns and the economic conditions had influenced the price trend of HDPE as the prices remained stable for the first week and then rose by the end of the first half of the month on September 15, 2023, in both the US and Europe.

In the US, the HDPE market has seen a favorable outlook, with a 1% increase by the conclusion of the first half of this month. This growth has been influenced by the upward movement in feedstock Ethylene costs and the escalation in upstream Crude oil prices stemming from production cuts and constrained supply. Further, the availability of HDPE dwindled as most producers had already sold out their stock, signaling ongoing tightness in the market expected to persist into September. The downstream market for HDPE, particularly the construction and automotive sector, has seen a positive market outlook in the USA in August compared to the previous month, keeping the demand stable. Furthermore, Nova Chemicals had to declare Force Majeure on September 14, 2023, for HDPE and LDPE resins produced in Ontario, Canada. This decision was made because of an unexpected shutdown at their Corunna Cracker plant, which supplies Ethylene to the Moore and St. Clair sites. Additionally,  in August, U.S. manufacturing experienced its tenth consecutive month of contraction. However, there was a slowdown in the decline, indicating that the sector may be approaching stabilization, although at lower production levels than in the past.

The European HDPE prices remained mostly stable, while the German HDPE surged marginally by 0.4%. The feedstock Ethylene witnessed an increment in September amid rising upstream Naphtha prices, contributing to rising HDPE costs. Further, with typhoons in the Asian region, there is a chance of disruptions in services between Asia and Europe. Furthermore, as the Chinese National Day holiday, often referred to as Golden Week, is approaching, when factories shut down, and production decreases, the demand for container shipping to and from Asia significantly decreases, potentially impacting the product's prices in the near term.

As per the ChemAnalyst, the HDPE prices are expected to gain a northward movement along with the strong consumption in the downstream industries and limited stock availability in the global market. The anticipated elevation in the feedstock Ethylene and upstream Naphtha and  Crude oil prices may influence the price trajectory of HDPE.