HDPE Shows Mixed Signals as USA and Europe See Declines, Asia Shows Modest Increase

During the previous week, there was a varied pattern in High-density Polyethylene (HDPE) prices observed across global markets. Prices for HDPE decreased in the USA and Europe, while the Asian market saw a marginal rise. The main factors behind these price fluctuations have been subdued demand alongside abundant supplies worldwide. Additionally, production costs have been affected by decrease in the prices of key inputs like Ethylene, Naphtha, and Crude oil. Furthermore, disruptions in supply routes due to geopolitical tensions have added further pressure on the market. As a result, European prices for Injection FD Hamburg (Germany) decreased by 1%, and US HDPE Injection Molding grade FOB Texas dropped by 2%, whereas Chinese HDPE Injection Molding EXW Jiangsu (China) prices saw a slight increase of 0.4% by the week ending on May 10, 2024.

In May 2024, the European market experienced a second consecutive month of declines in HDPE prices, with initial offers indicating reductions rather than just minimal adjustments in some instances. The bearish trend has been primarily driven by ample availability, weak demand, and competitive offerings from non-EU sources, rather than decreases in monomer contracts. Market participants are now deliberating whether these recent price drops will stimulate sales, particularly considering the shortened month due to holidays. The downturn in HDPE prices can be attributed to reduced demand from key sectors such as construction, automotive, and packaging, exacerbated by the lack of competitive pressure from cheaper imported materials. Even traditionally active sectors like construction and beverages during the spring season are not showing signs of recovery. Moreover, the declining cost of feedstock Ethylene has contributed to the overall downward trajectory of HDPE prices.

Moreover, in the United States, the HDPE market saw a slowdown from the brisk trading activity of previous weeks. HDPE prices experienced a downward trajectory amid abundant supply. Additionally, the decreasing prices of feedstock Ethylene and upstream Naphtha exerted pressure on costs, while the overall decline in Crude oil prices also influenced HDPE pricing. The drop in Crude oil prices was attributed to increasing product inventories and concerns regarding weakened gasoline demand in the US, resulting in a notable decrease in gasoline prices. Analysts noted traders engaging in purchasing prime HDPE railcars to replenish their stocks, while exports continued at a healthy pace, albeit with slightly softened prices to facilitate transactions.

In contrast, the Asian market, particularly in China, witnessed a modest increase, driven by an uptick in HDPE demand. Following the May Day holiday, the HDPE market demonstrated robust momentum, with prices gradually edging upwards. The ongoing centralized maintenance period at petrochemical plants has not significantly strained PE supply, allowing manufacturers and traders to incrementally raise prices. However, post-holiday, the pace of downstream consumption decelerated, and the agricultural film sector entered a production off-season, reducing its support for the product. It is anticipated that the upward trajectory of PE prices will slow down compared to April, possibly experiencing a slight correction.