CEH Report

Table of Contents

Abstract

LLDPE has established itself as the third major member of the polyethylene business along with LDPE and HDPE. In 2010, LLDPE had a world demand share corresponding to just over 30% of total demand for polyethylene.

North America, Western Europe, the Middle East and China accounted for slightly over 80% of total world LLDPE capacity in 2010. Based on new swing capacity additions, world capacity is expected to increase by about 20% by 2015.

The major LLDPE producing regions are the Middle East, the United States, Western Europe, Asia and China. By 2015 the Middle East and Canada will be the largest net exporters of LLDPE. Major net importers will be Western Europe and China.

The following pie chart shows world consumption of LLDPE:

Global demand for LLDPE will strongly depend on economic growth, particularly after the downturn in 2008 and 2009 and the slow recovery projected thereafter. The replacement of LDPE continues; however, each region is at a different stage of LLDPE penetration. The penetration in Canada is among the highest in the world (74%), while in China more LLDPE is still entering traditional LDPE applications. LLDPE penetration in China is also supported by a preferential import tariff that is lower than the one for LDPE.

One offset to volume growth is the continuing trend toward downgauging, which is expected to have a negative impact of 1–2% per year on consumption growth. In addition, Ziegler LLDPE demand is being eroded because of displacement by mLLDPE.

Abundant low-cost feedstocks will continue to create opportunities for export-oriented plants and influence global LLDPE trading patterns.

World consumption of packaging materials will continue to increase. Major drivers will be high-clarity packaging, high-barrier thin films (replacing foil and metalized films) and "active" packaging (to increase shelf life, enhance flavors or destroy harmful bacteria). Growth will also occur as items now packaged in rigid containers transition to high-quality flexible packages. Film structures will increase in complexity requiring consistent high-quality extrusion-grade resins that can also accommodate higher line speeds and thinner structures. Consolidation in the converting industry will accelerate, resulting in processors with global capabilities that will produce and ship materials from any location as economics dictate. Large purchasers of converted materials will use their purchasing power to actively bid one supplier against another, not only within a country or region but also among regions. Strong partnerships among resin producers, converters and end users will become more important.

World consumption of LLDPE is projected to grow at an average annual rate of almost 7%.