06 October 2011 22:45 [Source: ICIS news]
MEXICO CITY (ICIS)--Sales of linear low density polyethylene (LLDPE) in Mexico have increased in the last couple of years, narrowing the gap with low density PE (LDPE), producer and distributor sources said on Thursday.
The changes in demand were attributed to the price gap between LDPE and LLDPE, as buyers flocked to the cheaper LLDPE to reduce costs, the sources said at the Plastimagen conference and expo in Mexico City.
The large price gap between the two grades cannot be explained by raw material usage, as both grades use the same amount of ethylene. The price of LDPE is higher, in part, because of higher energy usage in the production process.
But the price differentials between the two grades in the last couple of years are much larger than what the energy costs can justify.
A source with local producer Pemex said that the gap in volume has been narrowed by about 10% in the last couple of years. Sales volume for LDPE has declined slightly and LLDPE volumes have increased.
A large distributor in Mexico saw sales of LDPE as stable, but agreed that demand for LLDPE has grown and continues to grow.
The price gap between the two grades of PE was small prior to 2010, as shown in the graph below. The gap started growing in early 2010 and has narrowed of late, mainly on price gains for LLDPE.
($1 = €0.75)
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