HDPE

Global Market Outlook on HDPE

• The global demand is expected to grow at 2–4 percent CAGR through 2023–2026

• Asia will remain the key demand driver with an expected growth of 3–5 percent, due to the increase in per capita consumption of plastics

• Capacity to increase during 2023-2025 period with additions in the US, China, and other Asian markets. Overall, supply to be ample till 2026

Global Market Size: HDPE

• The global HDPE market is valued at $66.1 billion in 2022, and it is estimated to touch $66.8 billion by 2026 in line with firm demand from food and consumer packaging

• Global HDPE prices decreased in 2019–2020 and market size witnessed a drop. However, due to firm prices in 2021, market size witnessed an uptrend in 2021. Prices are expected to witness a decrease in 2023 due to drop in consumer confidence index and high inflation which is expected to drop the market size of HDPE

• Capacity addition is the another major factor for drop in prices, about 10 Million MT is expected to come online in the next five years, which would increase negotiation power of buyers in the long term

Global HDPE Demand by Application

• The global HDPE growth is expected to be driven by the increase in demand for blow molding application (containers, jars, bottles) which are applicable in consumer goods and personal care industry

Downstream Demand Outlook

• The global HDPE demand is expected to grow at 2-4 percent CAGR driven by CPG and food & beverages industry

• –Growth in cosmetics & house hold products (shampoo, hygiene and beauty products) would be the major demand driver for blow moulding applications

• –Food packaging demand is driven by increase in snacks, meat, poultry, and frozen foods where HDPE film is majorly used. Increase in soft drinks would be another major demand driving industry for HDPE Blow Moulding Grade

• HDPE usage is increasing in potable water pipes as regulations demand elimination of PVC pipes containing lead stabilizers for such applications.

• The impact on industrial HDPE is low to medium on the overall HDPE market, since the market share is ~10-13 percent and packaging industry to drive the HDPE demand growth.

Industry Drivers and Constraints : HDPE

Drivers

• Demand from CPG industry: The demand for bottles from the consumer goods segment is expected to be steady which would be major driver. Moreover, growth from cosmetics industry would be secondary demand driver

• Demand from Pharmaceutical Industry:. Increased preference of HDPE bottles in pharma industry due to its price and properties in the recent years to be another major driver

Constraints

• Europe and US recycling targets: The European Union has set its targets for recycling to over 40 percent by 2025, which is expected to curb the demand for virgin HDPE in the market

• Drop in feedstock availability: The demand from gasoline is expected to drop across the globe in 2020-2021 period, which in turn would have an effect on the crude oil distillation process, through which naphtha is derived. Hence the availability of feedstock would be affected marginally which could have an impact on the growth of HDPE in the short term

HDPE : Cost Structure Analysis

• Price movements of ethylene have a considerable impact on the resin production cost and margins

• Due to Russia–Ukraine crisis, the utility cost contribution increased by 2–4 percent in 2022 compared with the previous years