Asian LLDPE Prices Plunge Amidst Weak Demand And Global Economic Challenges- What's Next For The Industry?

Amidst unfavourable economic conditions and sluggish demand, the Asian LLDPE market has experienced a price decrease. Lower import offers, subdued buying sentiment, and reduced export orders have contributed to this downward trend. In this article, we will provide an in-depth price movement analysis across various Asian regions, discuss the market impact of current conditions, and highlights significant developments in the LLDPE industry. Let’s get started:

Latest Updates

• Market Analysis– In Asia, LLDPE prices have declined due to lower import offers and weak buying sentiment. Uncertain market conditions caused by tightened liquidity in Western countries have added to the negative market environment. Moreover, decreasing upstream energy values and LLDPE futures have exerted further downward pressure on prices. In China, the import discussions have reflected stable to soft undertones as prices in the country are considered the lowest in Asia. The subdued demand sentiment in China has also influenced purchasing patterns in Southeast Asia.

• Prices– LLDPE prices in far East Asia have dropped by USD 13/mt on a week-on-week basis, with assessments at USD 938-972/mt CFR levels. Southeast Asia witnessed a decrease of USD 21/mt, with prices assessed at USD 988-1020/mt CFR levels compared to the first week of May 2023. India and Pakistan observed price declines of USD 12/mt and USD 20/NC/mt, respectively. Sri Lanka and Bangladesh also experienced a price decline of USD 10/mt compared to the first week of May 2023.

• Market Dynamics– The decline in LLDPE prices can be attributed to several factors, including weak demand, economic uncertainties, and global liquidity conditions. The tightening liquidity in Western countries, driven by rate hikes and a banking crisis in the US, has negatively affected export orders for the plastic industry compared to the previous year. Market participants remain cautious, adopting a wait-and-see approach, and anticipating potential price reductions in the near future. However, expectations of limited downside and reduced supply in the upcoming months provide some support to the market. 

• Plant Maintenance– Maintenance turnarounds have temporarily shut down Zhejiang Petrochemical’s No.2 HDPE unit, impacting production capacity. PetroChina Lanzhou also faced technical issues, leading to the shutdown of its LLDPE unit. The duration of these shutdowns is yet to be determined, but they are expected to impact the supply dynamics in the LLDPE market.

OFB’s Insight

The Asian LLDPE market has experienced a decline in prices due to weak demand, economic uncertainties, and global market conditions. Market sentiment remains cautious, with expectations of limited downside and potential price reductions. Close monitoring of market dynamics and supply developments will be crucial for industry players navigating these challenging times.

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