HdPE

Source: ECN

2000/03/13

While demand has been strong over the past few years, increased capacity could help to push down prices of hdPE in Europe later in the year

Supply/demand

Western Europe's hdPE capacity is around 5m tonne/year, against an apparent consumption of 4.8m tonne/year, says consultancy CMAI. Growth rates for 1998-2004 are forecast at around 4.7%/year. However, in 1999 domestic sales by west European producers were 8% up on the previous year as low European prices in the first half of the year kept imports at low levels. Import levels increased in the final quarter of 1999 as European prices improved and Asian sellers looked to alternative markets at a time when Chinese buying interest was low. Supply in Europe will rise significantly at the end of this year with the addition of two new plants, combined with expansions at other units, exerting downward pressure on prices.

Pricing

HdPE pricing has come under pressure at the start of the year after a succession of price hikes from March last year. Producers attribute this to slow seasonal demand and some destocking of inventories built up at the end of last year. Film grades have been subject to some price erosion in February, tracking movements in ldPE and lldPE, also used in film applications, with prices quoted at DM1.88-1.93/kg. Injection moulding and blow moulding grades have generally rolled over from January and are quoted at DM1.85-1.90/kg in February. Most producers are targeting hikes of around 10pfg/kg for March with the expectation of stronger demand and higher ethylene costs in quarter two as crude and naphtha costs continue to surge.

Uses

HdPE is characterised by its high thermal resistance and strength properties. Extrusion grades are typically used for wire and cable, sheets and thermoforming while blow moulding applications and injection moulding grades are typically used for bottles and containers of varying sizes.

Technology

HdPE is produced by slurry, solution or gas phase processes, the latter being able to 'swing' between hdPE and lldPE. The traditional Ziegler-Natta and chromium catalysts have been joined by metallocene catalysts which are claimed to give improved properties. Metallocenes also allow slurry loop operators to enter the lldPE market, blurring the historical boundaries between the PEs. Bimodal processes, using twin slurry or gas phase or a combination of reactors, claim to produce resins competitive with those from metallocenes. Montell has developed a single, multizone reactor which can produce bimodal and multimodal PEs using Ziegler-Natta or single site catalysts. DuPont has granted a licence to BP Amoco for the manufacture of hdPE using iron and cobalt tridentate catalysts.

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Outlook



New hdPE plants are being commissioned by DSM and Elenac in Europe in the second half of this year. Elenac says its new 250 000 tonne/year hdPE plant in Wesseling, Germany, is almost mechanically complete and start-up is on track for mid-year. DSM's 300 000 tonne/year plant is Gelsenkirchen, Germany, is due slightly later in quarter three. In addition, BP Amoco is converting a 160 000 tonne/year linear low density plant (lldPE) in Grangemouth, UK, to hdPE and Borealis is debottlenecking its Stenungsund, Sweden, swing unit from 300 000 tonne/year to 420 000 tonne/year this year.

New Middle East capacity coming onstream over the coming years is also clouding the outlook for hdPE in Europe. Yanpet will commission 600 000 tonne/year in Yanbu and Kemya 150 000 tonne/year in Al Jubail later this year. Prices and margins are likely to come under pressure around the second half of the year. The situation is unlikely to improve until 2001, when demand catches up with supply.

EUROPEAN HDPE CAPACITY, '000 TONNE/YEAR



Atochem Gonfreville, France 260
Borealis Schwechat, Austria 100
Beringen, Belgium 140
Porvoo, Finland 140
Burghausen, Germany 120
Ronningen, Norway 130
Stenungsund 300
Sines, Portugal 130
BP Amoco Lavéra, France 215
Grangemouth, UK 280
BSL Schkopau, Germany 31
Dex (Exxon/DSM) Beek, Netherlands 115
Dow Chemical Tessenderlo, Belgium 130
Terneuzen, Netherlands 310
Tarragona, Spain 180
DSM Gelsenkirchen, Germany* 465
Beek, Netherlands 280
Elenac Frankfurt, Germany 190
Knapsack, Germany 100
Münchmünster, Germany 100
Wesseling, Germany* 625
Tarragona, Spain 110
Polimeri Europa Brindisi, Italy 200
Porto Torres, Italy 110
Priolo, Italy 160
Repsol Química Puertollano, Spain 95
Tarragona,Spain 140
Solvay Antwerp, Belgium 130
Sarralbe, France 160
Rosignano, Italy 140
TotalFina Antwerp, Belgium 350
Feluy, Belgium 160

* Includes new capacity due onstream in second half of 2000 Source: ICIS-LOR