Processors have suffered from price instability during the last two years. For example, European low-density PE film grade prices jumped from a January 2003 low of just more than e700/tonne to e1250/tonne at the beginning of 2005. Such unpredictable price hikes made planning a headache for processors.
Of all PE applications, film and sheet lead the pack worldwide. Market analyst Horst Maack of MBS (Au, Switzerland) says this sector''s average growth through 2010, when it would command 39.7 million tonnes of the estimated 77.4 million tonne total PE market, is expected to be 4.3%. Only PE pipe applications are growing faster at 4.5%.
In Europe, the number of PE film extruders is dwindling due to restructuring and consolidation, says Andrew Reynolds, a market analyst at AMI Consulting (Bristol, England). European film consumption grew only 2%/yr from 2000 to 2003. During that time, the number of PE film processors decreased by 2.6%, with the largest drop (-14%) occurring in Britain. All Western European countries showed decreases in the number of PE film producers during the three-year period, while operations in Eastern Europe rose by 21.5%.
Reynolds says trends in Western Europe indicate there is little growth in areas such as carrier bags and refuse sacks due to continued downgauging and increased use of recyclate. Strong markets for PE films are in stretch film, hygiene films, specialized food packaging, and technical coextrusions. He says future successes with the material will concentrate on applications that focus on real customer value such as better hot-tack strength, downgauging for weight savings, line speed increases, and printing improvements. Commodity films, such as carrier bags, are moving to Asia and Eastern Europe to take advantage of relatively cheap labor.
The U.S. has seen a recent flood of bag imports, which bit into local processors'' profits. A group of North American processors decided to take action and in 2004 filed an antidumping suit and won against bag imports from China, Thailand, and Malaysia. The U.S. uses 100 billion PE shopping bags each year.
MBS''s Maack says that despite the trend toward technical PE applications, there are still lots of opportunities awaiting processors who don''t process metallocene PE (mPE), the much-talked-about resin grade during the late 1990s. He says new competitive developments in super hexane and bimodal PE as well as improved recipes with EVAs all point to possibilities that may offer easier processibility at lower cost with similar qualities to mPE. By 2010, MBS estimates mPE will have only 5.6% of the total PE market. In 2003 global mPE consumption was about 950,000 tonnes.
Peter J. Ferenz, marketing director at Univation Technologies (Houston, TX), says PE growth is being driven by changing demographics and lifestyles in developed markets. An aging population in Japan, North America, and Europe is requiring smaller food portions with easier opening. Also, dual-income couples are buying more prepared foods that require innovative PE solutions. Ferenz says that with the help of such applications, global PE consumption could rise to 6%/yr through 2010 with East and Southeast Asian and Latin American demand growing at higher levels.
In South America, Pelegrini Fernades, commercial manager at PE producer Politeno Industria e Comercio (Sao Paulo, Brazil), says his company continues to experience demand for PE downgauging, better optics, and preblended resins to make the processor''s work easier. "Because of the higher speed of automatic packaging machines, we''re also seeing a move from C4 and C6 LLDPE to high alpha olefins like C8 and some mPE," Fernades says. However, he cautions that polypropylene is starting to compete with PE for blow- and injection molding as well as certain film applications.
Fernades says that in Latin America LDPE is being squeezed out of many applications by LLDPE. This effect is less prevalent in Europe, particularly in Eastern Europe, where LDPE is the polymer most in demand, says András Nagy, deputy CEO for sales/marketing at Hungarian polymer producer Tisyai Vegzi Combinát (TVK, Tiszaújváros). He says LLDPE use will be limited by the amount of investment in new processing equipment to handle it, and European processors'' traditional blending of LDPE with LLDPE for ease of processibility will continue in the near future.
Eastern Europe is HDPE-bound
Nagy also sees strong growth in HDPE consumption in Eastern Europe, particularly blowmolded containers for household products, as well as in the construction sector. HDPE pipe for potable water and gas is in high demand in Russia, Romania, and Bulgaria, where infrastructure rejuvenation languished for years. Univations''s Ferenz says that by 2010, 30% of worldwide HDPE consumption growth will require bimodal HDPE grades to meet application demands, of which film and blowmolding will take more than 90% of the volume.
Middle Eastern resin producer Sabic (Riyadh, Saudi Arabia), which after the purchase of the polyolefins division of DSM (Sittard, Netherlands) in 2002 jumped to become the third largest global PE supplier, is concentrating commodity grades in the Middle East, where feedstocks are cheap, and upper end market grades in Europe.
Mustafa Al-Sahan, general manager marketing at Sabic, says that although there is now more or less a balance in PE output and consumption, the market is expected to tighten up.
He expects U.S. producers to stop expansion there because of rising natural gas costs. "We believe North America will be, by 2010, a net PE importer. But due to the [bulk] delivery mode there, compared to 25-kg sacks used elsewhere in the world, this demand may be difficult to supply from overseas," says Al-Sahan.
What innovations are in store for processors? Polyolefins producer Total (Brussels, Belgium) says second-generation metallocene PE grades to overcome problems of film processibility (low output rates, poor bubble stability, and lack of gauge control) are expected to nibble away at existing PE grades. The company''s M3410EP grade, for example, is said to approach the processibility level of LDPE, but has the added advantage of better drawdown and downgauging ability.
MBS''s Maack sees high-performance PE applications being the real money-maker in the future for processors. He points to trends such as tie-layer-free coextruded films, monolayer web providing barrier from specialty resins and blends, extrusion-laminated specialty films, and surface modified or coated films such as bagging web with an anti slip agent on the surface to prevent shifting of palletized bags during transport.
Robert Colvin [email protected]