LDPE Prices Heats-Up Across the US and Europe in Feb 2024, Here are the Reasons

During the first half of February 2024, Low-Density Polyethylene (LDPE) saw an increase in prices across Europe and the United States, primarily due to supply shortages and heightened market demand. In Europe, the price hike was mainly caused by limited supplies worsened by delays in cargo arrivals. Similarly, in the US, LDPE prices surged because of increased demand from sectors like construction and packaging. Furthermore, the rising costs of feedstock Ethylene, and upstream Naphtha, and Crude oil have significantly impacted LDPE production expenses in both regions, adding to the upward pressure on prices. Moreover, disruptions in critical transportation routes like the Panama Canal and the Red Sea have also contributed to market volatility during this period, further influencing pricing dynamics.

During this period, the demand for LDPE in the US market showed strong upward momentum, leading to continued price increases with a rise of 2% for Film grade FOB Texas (USA). Trading remained active, with participants actively involved in spot market transactions due to limited availability. The rising LDPE prices were driven by increased costs of Ethylene and Naphtha, which put additional pressure on product costs. Further, heightened export demand, fueled by ongoing logistical challenges, allowed producers to sell their products at higher prices. This surge in export activity helped reduce excess resin in the domestic market, tightening domestic supplies and pushing domestic LDPE prices higher. These price increases align with expected trends, as international LDPE prices rose alongside increasing freight costs. The recent rise in LDPE spot prices has encouraged producers to push for another price hike in February, following a successful increase implemented in January.

In Europe, the LDPE market experienced a significant price elevation of 4% for Film grade FD Hamburg(Germany), driven primarily by limited supplies caused by delays in cargo arrivals from the Middle East and restricted material quantities from the US. This upward trend was further exacerbated by decreased output rates and regional shutdowns. Despite this, overall demand remained relatively steady, characterized by subdued activity in end-user industries. Furthermore, market participants in the European region faced price escalation in February offers from domestic producers, despite only a slight increase in feedstock Ethylene prices. The scarcity of import options and reduced allocations compelled suppliers to prioritize expanding margins, especially after enduring negative margins for several months. With the February ethylene settlement showing a modest increase due to sluggish demand in January, the substantial price hikes sought by LDPE suppliers in February will significantly help them regain lost margins over the past few months. Meanwhile, market players are shifting their focus to March, engaging primarily in discussions regarding potential Ethylene contract price settlements for the upcoming month.