Polyethylene Resins, High-Density
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Published: June 2011
HDPE has been tremendously successful since its introduction in 1956 and is now used in a wide variety of applications, such as packaging, pipe, and wire and cable. HDPE is a linear thermoplastic with the repeating unit (–CH2–CH2–)n. Ethylene is the major building block for the polymer, although alpha-olefin comonomers may be incorporated at levels of 1–2 weight percent to modify polymer properties.
The global polyethylene (PE) business is undergoing rather extensive consolidation. On the supply side, a number of mergers, acquisitions, alliances and joint ventures have taken place in the last few years to improve competitiveness, reduce costs, expand scale, enhance market position and expand geographic coverage. Furthermore, the expected wave of overcapacity has not materialized to the extent that had been envisaged. Additionally, a number of cracker outages, particularly in Europe, have in some cases created product shortages that boosted utilization rates. On the demand side, the drastic economic downturn in 2008 and 2009 misled most of the recent projections: because of the outstanding growth in domestic demand in the BRIC region (Brazil, Russia, India and China), the supply/demand balance appears to be much shorter than predicted and global PE markets are expected to return to average utilization rates by 2013–2014.
The short-term outlook for PE is oversupply for all three basic grades of PE; LDPE and HDPE appear to be worse than LLDPE. Based on this outlook, older LDPE units in higher-cost areas such as the Philippines, Indonesia, China, Japan and Western Europe will be forced to shut down. The same is expected for inefficient HDPE units. On the contrary, swing units will be required to increase output of LLDPE at the expense of HDPE as a result of LLDPE's being less oversupplied than HDPE.
The following pie chart shows world consumption of HDPE:
Blow molding, injection molding, and film and sheet account for approximately 64% of the world market for HDPE, most of it being packaging, with the exclusion of blow-molded fuel tanks. Construction represents 10–15%, while another 10–15% is distributed among a myriad of consumer and industrial applications. These markets are influenced by business cycles and fluctuate in tandem with the economy as a result of the exposure of HDPE applications in construction such as piping. Future growth in world HDPE consumption will be driven by the status and progress of regional economies, continued substitution of traditional materials (e.g., glass, wood, concrete, paper) by HDPE, and avoidance and obsolescence of HDPE in some traditional applications. This latter factor will be more evident in the developed regions of the world, where continued improvements in polyolefin processes and catalyst technologies should allow for the production of very broad ranges of products and grades that will increase HDPE's utility in the marketplace. HDPE will also face competition, not just from traditional materials such as other thermoplastics, but also from emerging polymers brought into the marketplace via new technologies such as metallocene catalysts.
World consumption of HDPE is forecast to grow at an average annual rate of 3.6%, while all polyethylene demand is expected to grow at 4.2% per year as a result of faster growth for LLDPE. The projections of this report have been based on a reasonable recovery of the economy.