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The global polyethylene business is undergoing rather extensive changes. On one side large capacity increases concentrated in China and the Middle East will reshape the world trade flow of the three polymers. On the other, the new, large-scale units based in the Middle East region will alter the economic competitiveness and pricing structure established in key regions such as North America and Europe. The increased competitiveness of the new plants will create considerable restructuring and consolidation of the less competitive producers or units.
While consumption growth of LDPE has been rather strong compared with the expectations of decline from the loss of market to LLDPE, the far-too-large capacity additions planned in China and the Middle East will force a large number of producers to shut down the least efficient operations. To some extent, this trend is already in place; Borealis and Basell have applied some of these geographical diversification and scrap-and-rebuild implementation strategies. Others, such as Lyondell, Voridian and Huntsman, have opted for divestiture, exiting the business altogether.
The following pie chart shows world consumption of LDPE by region:
Mergers, acquisitions and restructuring of companies and polyethylene production lines in the last two years have substantially rearranged the top-ten ranking of global LDPE producers.
Since 2003, a number of concurrent factors, such as licensors’ promotional efforts and the new wave of investments in Iran, the Persian Gulf countries and China, have led to a large number of new LDPE projects that are expected to be on stream between 2008 and 2010. These projects will disrupt the tight market balance enjoyed by LDPE and consequently may erode the LDPE price premium compared with the other polyolefins. These developments will increase the economic pressure on the low performers in less competitive countries.
By 2011, the major LDPE producing regions will be North America, Western Europe, the Middle East and China, while the largest net importer will continue to be China.
Film applications are by far the largest market for LDPE, accounting for 55% of world consumption in 2006. Film demand is split between packaging and nonpackaging uses; packaging applications account for 60–77% of film use, depending on the market development. Typical applications for food packaging include baked goods, dairy products, frozen food, produce, meat and poultry, candy and cookies. Nonfood packaging includes industrial liners, heavy-duty sacks, multiwall sack liners, pallet stretch- and shrinkwrap, bundling and overwrap, grocery sacks, merchandise bags and garment bags. Typical nonpackaging uses include household wrap and bags, garbage bags, industrial sheeting and rollstock, agricultural film and disposable diaper backing.
Extrusion coating is the second-largest market for LDPE worldwide, accounting for 9.9% of total demand in 2006. Typical applications include the coating of paper and paperboard products for packaging liquids such as milk and juices, the coating of foil to provide a heat-seal layer in multilayer film structures, and the coating of paper and woven cloth to provide a moisture barrier. Extrusion coating continues to be a growth area for LDPE, largely because of innovations in packaging technology.
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