In recent months, market players have reported that supply across much of the low-density polyethylene (LDPE) market is ample, adding that there is a good availability of product in the US and EU markets. Buyers are mostly well covered, with many reporting that they have little need to purchase additional material. One EU-based buyer commented, “I think what is happening in the polymer market is a correction of price levels to pre-pandemic levels. Also, there is super low demand in the market for flexible packaging.” These dynamics of abundant supply and weak demand appear to be starting to apply downward pressure on prices. For reference, for the week ending 6th December, the prices of LDPE in the US and Germany (a strong representation of the EU) were USc 87/lb and €1,698/mt, down 7.5% and 2.7% m-o-m, respectively.
While supply and demand factors have resulted in declining prices, falling production costs are also adding bearish sentiment to the market. The price of crude oil, a key component to produce raw material for polyethylene, has been declining in recent weeks on record high US production estimates by the Energy Information Agency (EIA) and the removal of sanctions against Venezuela (a country with major oil reserves). For reference, the Brent crude oil price [Mintec Code: BCRD] at the close on 11th December was $76.03/barrel, down 7.9% m-o-m, representing a 2.5% y-o-y decrease. Given the fall in crude oil prices, players within the plastics market anticipate further plastics price declines.
Mintec will continue to provide updates on this market development as they become available. To share insights, please contact andrew.woods@mintecglobal.com
.png)
