LDPE (Low Density Polyethylene)

LDPE (Low Density Polyethylene) Global Market Outlook

• 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. Some suppliers are planning to produce EVA along with LDPE in the same unit, due to high margins

• Capacity to increase during 2023-2025 period with additions in the US, China, and other Asian markets. Overall, supply to be ample till 2026. Overall, capacity additions of LDPE is comparatively less in comparison with HDPE and LLDPE as same units can be used to produce HDPE & LLDPE.

Demand Market Outlook

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

• The Middle East and North America are supply surplus regions, while Asia, LATAM, and Europe are trade deficit regions. The trend is broadly expected, however supply deficit in Asia to decrease

LDPE (Low Density Polyethylene) Global Capacity–Demand Analysis 

• Capacity additions are expected in Asia and China. Even with these capacity additions, China is expected to be net importer of LDPE during the forecast period. Adequate capacities in the US could lead to increased exports into LATAM, Europe, SE Asia, and African countries. Asia players are planning to produce EVA and LDPE alternatively in the same unit due to very high margins for EVA and high demand from solar PV panels.

Market Outlook

• Capacity Dynamics: The global LDPE production capacity is expected to increase by 1-2 MMT to touch 28.4 MMT by 2025, driven by the capacity additions in Asia. Moderate growth in LDPE capacity is due to LLDPE capacities additions. Moreover, LLDPE and HDPE can be alternatively used in the same unit.

• Demand: The global LDPE demand is estimated to grow at 2-4 percent, driven by film applications in the packaging segment

Engagement Outlook

• The North American market is predominantly contract based, and buyers prefer to source locally, due to higher cost of imported LDPE

• Contracts are generally renewed annually

• In Asia, buyers engage in spot buying and source both within the region or from Europe/Asia, if arbitrage opportunities are available

• In Europe, the buyers source both within the region and from Asia/Middle East. Both spot and contract prices are used

• The suppliers are willing to enter into a contract, only if the minimum order volume is over 1,000 MT or sometimes over 2,000 MT

LDPE (Low Density Polyethylene) Industry Drivers and Constraints

Drivers

• Demand from Packaging industry: The demand for stretch and shrink films from the food and beverages, personal care industry to be the major driver in the upcoming years.

• Demand from healthcare Industry:. Growth in health care industry is expected to be another major driver. It is majorly used in medical bottles and devices packaging.

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 LDPE 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 LDPE in the short term