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In terms of volume, HDPE is the third-largest commodity plastic material in the world after polyvinyl chloride and polypropylene.
Blow molding and injection molding are the dominant end uses for HDPE in both Western Europe and North America, accounting for 45–54% of total consumption. In contrast, consumption of HDPE in these end uses constitutes only 31–39% of total HDPE consumed in Japan and Other Asia. As a percentage of total HDPE consumption, film usage in Japan and Other Asia is over twice as great as the film share in either the United States or Western Europe.
The following pie chart shows world consumption of HDPE:
The global business is undergoing rather extensive restructuring and consolidation. A number of mergers, acquisitions, alliances and joint ventures continue to take place to improve competitiveness, reduce costs, expand scale, enhance market position and expand geographic coverage.
New projects in the Middle East and China expected to be on stream between 2008 and 2010 will represent a major threat for the existing producers outside the low-feedstock-cost regions increasing attrition caused by the wave of overcapacity expected to peak between the end of 2009 and 2010.
The increasing cost of ethylene driven by skyrocketing crude oil, and the inability of converters to absorb such high price increases makes traditional margin fluctuations part of the past, confirming the fundamental importance for higher-cost producers to be upstream-integrated to retain competitive edge and the economic success of their PE operations. |
In the future business model it seems that an asset foothold in the Middle East is becoming essential while owning technology and economy of scale have become a common ground for most producers.
The average size of a worldscale PE production unit has increased substantially over the years. From 50 thousand metric tons in the 1970s, reactor sizes have increased to 350 thousand metric tons per year for slurry HDPE and 450 thousand metric tons per year for Ziegler or chromium-based swing plants; LDPE scale has now reached 400 thousand metric tons as nameplate capacity.
Consolidation continues to be one of the leading issues facing the industry. It is the natural response to economic conditions that occur as products become commodities and interact with business cycles. The result of consolidation is fewer larger players and less fragmentation and an increasing focus on competencies.
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