LLDPE Prices Drop in US While Europe Rises Amid Supply Constraints and Geopolitical Tensions

This week's Linear Low-Density Polyethylene (LLDPE) market exhibited divergent trends globally, with the United States experiencing a price decline, in contrast to a price increase in Europe. The trading pace in the U.S. slowed slightly as production and logistics returned to normal after disruptions from Hurricane Beryl, leading to a 2.5% decrease in LLDPE prices for Film Butene-based grade FOB Texas. Meanwhile, the European market saw a 1% increase in LLDPE prices for Film grade FD Hamburg, attributed to supply constraints amidst moderate to low demand from downstream industries such as construction, packaging, and automotive. In Asia, the market remained stable, although Chinese LLDPE prices decreased marginally.  Feedstock Ethylene prices decreased in Europe and Asia due to the depreciation of crude oil prices, yet rose in the U.S., impacting regional LLDPE price dynamics. The supply challenges in the European and Asian LLDPE markets, combined with fluctuating feedstock prices, underscore the complex interplay of factors influencing the LLDPE market this week, which concluded on July 19, 2024.

The U.S. LLDPE market experienced a decline in prices after weeks of upward movement, as trading activity slowed down following the mid-month normalization of production and logistics post-Hurricane Beryl. The week of the LLDPE market was characterized by a quieter period as market participants assessed a series of significant events. These included escalating tensions in the Middle East, volatile monomer markets, decreasing international ocean freight rates, and a shortage of fresh resin supply due to the impact of Beryl. Despite the limited flow of new offers in both domestic and export markets and the continued tightness in material availability, market sentiment turned cautious. 

Meanwhile, in Europe, the increase in LLDPE prices is mainly due to supply constraints resulting from decreased import volumes and reduced domestic production. Market sentiment remains pessimistic during the sluggish summer season inquiries for LLDPE, with low expectations for a demand rebound.  Furthermore, the ongoing Red Sea crisis has intensified supply chain difficulties, forcing vessels to reroute around the Cape of Good Hope. This rerouting has led to congestion at alternative routes and transshipment hubs essential for trade with Asia, and Europe, as reported by shipping agents. These disruptions are having a significant impact on global supply chains, further exacerbating the supply issues in the European LLDPE market.

According to ChemAnalyst, the LLDPE market is projected to maintain its strength throughout July, driven by robust trading activities in the U.S. market. However, a potential easing is anticipated in August due to decreased demand and adequate supply levels. While U.S. trading is expected to remain strong, LLDPE prices in Asian and European markets may face pressure from rising freight rates, which are exacerbated by ongoing supply disturbances. Demand from downstream industries, such as construction, packaging, and automotive, is predicted to remain moderate, although it may soften compared to earlier in the month.