LDPE (Low Density Polyethylene) Market Intelligence

Industry Outlook & Drivers

LDPE (Low Density Polyethylene) Global Market Outlook

• The global demand is expected to grow at 2-4 percent CAGR through 2019–2024
• 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
• Film applications and food/non-food packaging applications are expected to be the key segments driving the growth across the regions especially from the packaged fruits, vegetables to pet food, cosmetics, and pharmaceutical segment

Demand Market Outlook

• The global LDPE demand is expected to grow at 2–4 percent CAGR through 2019–2024
• The Middle East and North America are supply surplus regions, while Asia, LATAM, and Europe are trade deficit regions. The trendis broadly expected to continue in the next five years 

LDPE (Low Density Polyethylene) Industry Best Practice 

LDPE (Low Density Polyethylene) Engagement models

• CPG companies generally outsource their packaging requirements to converters, as they helps them to focus on their core business
• Large-scale converters have high price negotiation power with the resin suppliers on the back of heavy annual volume
• Consortium buying is still in the nascent stage in the LDPE market and is not a preferred model

LDPE (Low Density Polyethylene) Contract structures

Fixed Contract

• Length of contract: One year on an average
• Minimum volume in contract: >1,000 MT/year

Multi-year Contract

• Length of contract: 2–3 years. However, we have not observed multi-year contracts due to high volatility in the prices

LDPE (Low Density Polyethylene) Global Capacity–Demand Analysis 

Capacity additions are expected in the US and China. Even with these capacity additions, China is expected to be net importer of LDPE during the forecast period.Increase in new capacities in the US could lead to increased exports into LATAM, Europe, SE Asia, and African countries.

Market Outlook

• Capacity Dynamics: The global LDPE production capacity is expected to increase by 1-2 MMT to touch 27MMT by 2024, driven by the capacity additions in the US, Asia. Moderate growth in LDPE capacity is due to LLDPE capacities additions. Moreover, LLDPE and LDPE 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