LLDPE (Linear low-density polyethylene) Market Intelligence

Report Coverage

  • Cost and Price Analysis (US, Europe,Asia, LATAM, and MEA)
  • Contract Structures
  • Covid-19 Impact
  • Category Opportunities & Risks

Production Size

Global Production

44.6 MMT

North America

9.7 MMT

Europe

4.0MMT

APAC

18.6 MMT

LLDPE Table of contents

  1. LLDPE (Linear low-density polyethylene) Executive Summary
  2. Global Market Outlook
  3. SupplyMarket Outlook
  4. Demand Market Outlook
  5. Beroe’s Recommendations for an Ideal Category Strategy
  6. Category Opportunities & Risks
  7. Industry Best Practice
  8. CATEGORY SUMMARY
    –COVID-19 IMPACT

 

  1. LLDPE (Linear low-density polyethylene) Market Analysis
  2. Global Market Size:LLDPE
  3. Global Capacity
    –Demand Analysis
  4. Global Demand by Application
  5. Global Market Outlook
  6. Global Trade Dynamics
    –Global Imports
    –Global Exports
  7. Regional Market Outlook (North America, Europe and Asia, LATAM, and MEA)
    –Supply–Demand Trends and Outlook
    –Trade Dynamics
  8. Covid-19 Impact

 

  1. LLDPE (Linear low-density polyethylene) Industry Analysis
  2. Industry Outlook (North America, Europe and Asia, LATAM, and MEA)
    –Drivers and Constraints for the Industry
    –Porter’s Five Forces Analysis
    –Industry Events
    –Planned Capacity Additions

 

  1. LLDPE (Linear low-density polyethylene) Market Monitoring Insights
  2. Cost and Price Analysis (US, Europe,Asia, LATAM, and MEA)
    –Cost Structure Analysis
    –Price Analysis:LLDPE (NorthAmerica, Europe, Asia, LATAM, and MEA)
  3. Purchasing Process: RFP/RFI Questionnaire 

 

  1. LLDPE Supplier Section& Sustainability and Innovation Initiatives
  2. Supplier Section
  3. Sustainability Initiatives
  4. Key Innovations 

 

  1. LLDPE (Linear low-density polyethylene) Industry Best Practices
  2. Contract Structures
  3. Industry Best Practices

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LLDPE (Linear 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

LLDPE Industry Best Practice

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 LLDPE market and is not a preferred model

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

LLDPE (Linear 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 LLDPE 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 LLDPE production capacity is expected to increase by 5-6 MMT to touch 50 MMT by 2024, driven by the capacity additions in the US, Asia. Moreover, LLDPE and HDPE can be alternatively used in the same unit and due to better barrier properties, hence there is a huge surge in capacity additions.
  • Demand: The global LLDPE 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 LLDPE
  • 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

Impact of COVID-19 on LLDPE (Linear low-density polyethylene)

The LLDPE market was significantly impacted by COVID-19 in Q2 2020, as demand from industrial (construction and automotive) witnessed a steep decline, which resulted in adequate supply and lower demand. The prices in Q2 2020 were traded at record lows and some plants went offline, due to labor shortage.

  • As businesses are faced with unexpected closures and demand uncertainties, LLDPE demand from automotive and construction industries, which accounts for ~15 percent market share, had a major impact
  • LLDPE demand from food & beverages remained healthy and consumer & personal care industry demand remained steady in Q2 2020•
  • emand broadly recovered in all the sectors by Q3 2020

Raw material supply

  • Availability of feedstock witnessed a surplus in the market with demand drop fromthe industrial segment. Demand from food & beverages remained healthy.

LLDPE Price volatility

  • With crude oil prices declining, prices for LLDPE witnesseda steep decline, and with adequate supply, Q2 2020 was favorable for the buyers.

Impact to LLDPE Industry

  • No major impact is expected, as the demand from food & beverages and consumer & home care segment have remained steady, despite COVID-19 pandemic
  • Capacity additions of 1–2 MMT commenced until Dec-20, majorly in China and the US, indicating better demand trends

LLDPE (Linear low-density polyethylene) Frequently Asked Questions

  1. How does the global LLDPE market?
  2. Beroe’s market intelligence reveals that the worldwide LLDPE production currently stands at 44.6 metric million tons (MMT), and the global demand will grow at a 2-4% CAGR from 2019 through 2024.
  1. How has the COVID-19 impacted the bottom lines of LLDPE producers?
  2. Given the COVID-19 impact, demand from the construction and automotive sectors, which collectively account for around 15% of the overall LLDPE market, has declined. Moreover, the prices during Q2 2020 hit record lows, with some manufacturing units shutting down due to workforce scarcity. That said, the consumption of LLDPE in the food & beverage and consumer & personal care industries has remained consistent.
  1. Which region holds the major chunk of the global LLDPE market?
  2. With a production of 18.6 MMT, Asia Pacific (APAC) will remain at the driver’s seat in the global LLDPE market over the forecast period. In addition, the Asian market will grow at a 3-5% CAGR, given the rising per capita plastic consumption.
  1. Which engagement models are prevalent across various regions?
  2. Players in the North American LDPE market majorly prefer contract-based engagement models, and buyers are more inclined toward domestic sourcing due to the higher costs of imported LLDPE. In Europe, the buyers focus on both spot and contract-based models and source LLDPE internally and from Middle East/Asia. Furthermore, the Asian buyers engage in spot buying and source LLDPE locally or from Europe.
  1. What contract structures do the players in the global LLDPE market follow?
  2. LLDPE manufacturers engage in two types of contract structures - fixed contracts and multi-year contracts. While the former lasts a year on average, the latter lasts 2-3 years. Moreover, market players keep themselves away from multi-year contracts due to high price volatilities.
  1. Which regions are seeing LLDPE capacity additions?
  2. The US and China have announced capacity additions of 1–2 MMT until December 2020, signaling better demand trends.

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