Polyethylene-LD

*Millions of pounds per year of low-density polyethylene (LDPE) resin. The long side-chain branching of the LDPE molecules produce a more amorphous polymer having a lower melting point and higher clarity, compared to linear-low-density polyethylene (LLDPE). LDPE is also differentiated from LLDPE by lower physical property values in tensile strength, puncture and tear resistance, and elongation.

Last August Dow Chemical Company announced it would idle approximately 885 million pounds of polyethylene capacity in North America. Dow said the idling was "demand-driven" and reflected concern about energy and gas costs. Affected sites and the product mix have not been disclosed. In North America Dow has 9.8 billion pounds of annual polyethylene capacity comprised of LDPE, 1.8 billion pounds; LLDPE, 6.1 billion pounds and HDPE (high density polyethylene), 1.9 billion pounds.

Early last year, ExxonMobil eliminated an old, small production line having 100 million annual pounds of LDPE capacity at Baton Rouge. Current capacity is 875 million pounds LDPE at the Louisiana site.

In 2001 Equistar Chemicals increased LDPE capacity at its Morris, Ill. site by 70 million-pounds, to 610 million-pounds per year. The same year, the company closed its 190 million-pound LDPE reactor at Port Arthur, Tex.

Voridian is a division of Eastman Chemical Company.

Profile last published 4/2/01; this revision, 11/24/03.

DEMAND

2001: 5,535 million pounds; 2002: 6,010 million pounds; 2006: 6,255 million pounds, projected. Demand equals production plus imports (2001: 611 million pounds; 2002: 276 million pounds) less exports (2001: 1,252 million pounds; 2002: 1,556 million pounds).

GROWTH

Historical (1997 - 2002): -1.2 (negative) percent per year; future: 1.0 percent per year through 2004.

PRICE

Historical (1997 - 2002): High, $0.60 per pound, film liner LDPE, bulk, Gulf, frt. alld.; low, $0.32, same basis. Current: $0.54, same basis.

USES

Film,48 percent; extrusion coating, 24 percent; injection molding, 9 percent; wire and cable, 5 percent; adhesives and sealants, 3 percent; sheets, 3 percent; blow molding, 1 percent; miscellaneous, including pipe, conduit and rotomolding, 7 percent.

STRENGTH

Extrusion coating of paper and paperboard, the second largest application segment, continues to be a growth area for LDPE, largely because of innovations in packaging technology for paperboard coating and paper and foil composite structures. The segment is growing at 1.7 percent presently. LDPE is easier to process than LLDPE and has good strength and clarity.

Injection molding, the third largest application segment, is growing at 4.2 percent. The uses include household goods, toys and sporting goods, caps and closures, and medical appurtenances.

WEAKNESS

LDPE’s largest market segment, films, continues in decline because of penetration by LLDPE in many applications. The trend in food packaging films is toward high performance film structures. These are less permeable barrier films, designed to increase shelf life. Nonfood packaging requires stronger films that allow downgauging, saving material and reducing cost. The biggest competition with LLDPE, however, is mainly in nonpackaging applications: carry-out bags, trash can liners, construction films and disposable liners. In one segment there is resistance to LLDPE penetration. It is the high-clarity market for LDPE, which includes produce bags, bakery film, and textile and paper overwrap. Film use of LDPE declined between 1997 and 2002, at 4.7 percent per year. This decline will continue over the forecast period, but at a lesser rate.

With the exception of extrusion coatings and injection molding, LDPE’s other application segments are declining 2 to 3 percent annually, largely as a result of displacement by LLDPE.

OUTLOOK

Polyethylene is balanced being somewhat constrained by ethylene availability due to recent turnarounds and the rationalization of ethylene capacity, nearly 10 percent of the installed base, since 2000. Polyethylene producers have achieved significant price increases earlier this year to mitigate the margin squeeze imposed by higher ethylene costs, which were driven by significantly higher natural gas prices. Industry participants are looking to 2004/2005 for a rebound in polyethylene and other petrochemicals. New gas wells presently being drilled should help to lower and stabilize natural gas prices, and the demand side pulled along with a more robust economy. Polyethylene overall should grow at nearly 5 percent annually, but LDPE is forecast for only at 1 percent growth due to continued decline in its major application, film production.

HISTORICAL DATA