Low-Density Polyethylene Resins
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Published: May 2012
Low-density polyethylene (LDPE) is a category of branched polymers of ethylene including ethylene homopolymer resins, as well as copolymers of ethylene with vinyl acetate and acrylic monomers. Over the last three decades LDPE has lost its one-time prominence in the polyethylene resin category as generic linear low-density polyethylene (LLDPE), single-site LLDPE resins, and more specialty plastomer volumes have increased at its expense within many of its critical volume markets. Over time this scavenging of volume markets has slowed, resulting in the use of LDPE in more specialty applications where its branching character is hard to match via the competing LLDPE resin types.
Over the last decade, as the market for LDPE in its remaining applications has begun to stabilize, licensors have promoted new very large world-scale LDPE equipment. Willing investors in Iran, other Persian Gulf countries and China have driven a number of new large LDPE projects, which began coming onstream during 2008–2010. These new projects have disrupted and will continue to disrupt the prior tight market balance enjoyed by LDPE producers and consequently may erode the LDPE price premium compared with the other polyolefins. These developments will increase the economic pressure on the small-scale and older plants in less competitive countries.
The following pie chart shows world consumption of LDPE:
Film and sheet applications are the largest-volume markets for LDPE, accounting for 67% of world consumption in 2011; about 80–82% of this category is film and 18–20% is sheet. Film demand is split between packaging and nonpackaging uses; packaging applications account for 60–77% of film use, depending on market development. Major applications for food packaging include baked goods, dairy products, frozen food, produce, meat and poultry, candy and cookies. Nonfood packaging includes industrial liners, heavy-duty sacks, multiwall sack liners, pallet stretch- and shrink-wrap, bundling and overwrap, grocery sacks, merchandise bags and garment bags. Typical nonpackaging uses include household wrap and bags, garbage bags, industrial sheeting and roll-stock, agricultural film, and disposable diaper backing.
Extrusion coating is the second-largest market for LDPE, accounting for 10% of total world demand volume in 2011. Typical applications include the coating of paper and paperboard products for packaging liquids such as milk and juices, the coating of foil to provide a heat-seal layer in multilayer film structures, and the coating of paper and woven cloth to provide a moisture barrier. Overall growth for LDPE worldwide is expected to be modest, and extrusion coating is likely to track only slightly better than average growth over the next five years, slowed somewhat by continued development of the use of single-site LLDPE in packaging construction.
Injection molding is the third-largest end use for LDPE resins worldwide, accounting for 7% of world demand in 2011. Typical applications include toys, housewares, and lids, caps and closures for containers.
Demand for LDPE homopolymer and copolymers weathered the recession in 2008–2009, growing—albeit at only 1% per year—over the last five years through 2011. With the recovery from recession, LDPE growth will improve to 3.5% per year through 2016 despite advanced product maturity.
The long-term outlook for global polyethylene (PE) markets does indicate growth for LDPE, but business cycles, characterized by recurring volume cycles and price swings, have not been eliminated by globalization or upstream integration. The forces of globalization have actually tended to make the PE business more internationally competitive and less profitable on a global basis. In spite of all the vertical and market repositioning and rethinking of business models, the polyethylene business remains highly cyclical, characterized by profit volatility.
By 2016, the top four LDPE producing regions will be Western Europe, the Middle East, the United States and China, and yet the largest net importer will continue to be China. China—based on its large and growing consumer base for polyethylenes—will be adding 6–7 million metric tons of new polyethylene capacity by 2020. Even so, China will remain a large importer as its new production capacity will fail to fully satisfy growing demand.