LdPE

10 September 2001 00:00  [Source: ICB]

Growth in western Europe is steady as ldPE slowly loses some market share to lldPE. Global demand is around 2.5%/year

Uses

Low density polyethylene (ldPE) is mainly used as a packaging film, either on its own or blended with linear low density polyethylene (lldPE) to improve mechanical properties. Film applications account for about 50% of world demand. Blown ldPE film has good processability and can be used in food and medical/pharmaceutical packaging in high purity grades as well as in agricultural film and disposable nappies. It is also used in sheathing for electrical and communication cables, which takes 10% of ldPE output, and in the extrusion coating of paper and board for the packaging of liquids and in moisture barrier applications.

Supply/demand

Production in western Europe crept up to over 4.8m tonne last year, according to the Association of Plastics Manufacturers in Europe (APME). It rated domestic sales in 2000 at 4.2m tonne, and sales outside the region at 549 000 tonne. Players say demand for January-July is up by 1% over the same period last year. They report improved sales in July/August following a slow May/June, although an element of pre-buying ahead of price hikes is evident, as well as customers replenishing an empty pipeline. Producers expect a stronger second half and are predicting sales growth this year of about 2% over 2000.

BP announced in late August the permanent closure of its Wilton, UK, plant. Production will cease from October and a supply deal with Basell will help meet contract commitments. More closures at other similar small plants are expected. Basell's new 320 000 tonne/year plant at Aubette, France, finally started up in March, delayed from its original onstream schedule of mid-2000.

Pricing

European prices have been on a downward trend from levels of DM2-2.05/kg in May/June last year. Increases were achieved in March through May as short supply and good demand supported better numbers. Prices have slipped again in the last three months and were reported in the range DM1.62-1.67/kg for August. Producers believe prices have bottomed out and have announced a E100/tonne rise from September in an attempt to boost poor margins.

Technology

Two basic processes are available: stirred autoclave or tubular routes. The tubular reactor is gaining preference over the autoclave route due to its higher ethylene conversion rates. The reaction is carried out using a free radical initiator consisting of one or two peroxides with or without oxygen. The processes can generally be used to make copolymers with polar comonomers, ie EVA polymer. The scale of tubular plants has risen to about 300 000 tonne/year and above. Capital costs are said to be competitive, while the higher utility costs for ldPE are offset by no need for comonomers.

Health and safety

LdPE is a translucent solid with a waxy surface, which is resistant to weak acids and alkalis. Dust can irritate the eyes, nose and throat. LdPE has low flammability but gives off smoke on burning.

Outlook

West European growth is no more than 1%/year because of declining market share to lldPE. Eastern Europe has higher growth potential at 3-5%/year depending on the country. Global growth is about 2.5%/year. Players say ldPE is becoming competitive again because of the larger reactor size. They also believe the latest metallocene lldPE grades will not be a major threat to standard ldPE resins, as they command a price premium and will be used more in enhanced applications.

Petkim will commission a 120 000 tonne/year plant in Aliaga, Turkey, in 2004, by which time Russia's Gazprom also anticipates starting a 300 000 tonne/year plant. DSM has plans for a 400 000 tonne/year unit at Geleen, the Netherlands, which it wants to implement with a third party. Several other projects are proposed or under way in Iran, China and Malaysia.

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EUROPEAN ldpe CAPACITY, '000 TONNE/YEAR

Company	Location	Capacity
Arpechim	Pitesti, Romania	80
Atofina	Balan, France	120
	Carling, France	230
	Gonfreville, France	160
	Mont, France	80
Basell	Aubette, France	320
	Carrington, UK	170
	Fos, France	110
	Wesseling, Germany	430
Borealis	Porvoo, Finland	190
	Ronningen, Norway	145
	Schwechat, Austria	240
	Sines, Portugal	140
	Stenungsund, Sweden	135
BP1	Wilton, UK	100
Dow Chemical	Leuna, Germany	160
	Tarragona, Spain	95
	Terneuzen, Netherlands	265
DSM	Geleen, Netherlands	565
Erdölchemie2	Cologne, Germany	350
ExxonMobil	Antwerp, Belgium	265
	Meerhout, Belgium	400
HIP Petrochemija	Pancevo, Serbia	45
Lukoil-Neftochim	Burgas, Bulgaria	85
Petkim	Aliaga, Turkey	180
	Yarimca, Turkey	30
Petrobrazi	Brazi, Romania	90
PKN	Plock, Poland	165
Poli-Chem	Blachownia, Poland	20
Polimeri doo Zagreb	Krk, Croatia	70
	Zagreb, Croatia	85
Polimeri Europa	Dunkirk, France	185
	Ferrara, Italy	110
	Gela, Italy	215
	Oberhausen, Germany	120
	Ragusa, Italy	155
Petromidia	Midia, Romania	60
Repsol YPF	Puertollano, Spain	100
	Tarragona, Spain	130
Slovnaft	Bratislava, Slovakia	180
Speciality Polymers3	Antwerp, Belgium	130
TDESA4	Tarragona, Spain	170
TVK	Tiszaujvaros, Hungary	115

¹ Plant to close Oct 2001
² Owned 100% by BP
³ Borealis/DuPont 50:50 jv
⁴ Dow/Repsol jvSource: ECN/CNI

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