Polyethylene (PE) is one kind of the synthetic resin with large output. According to the different production pro- cess, PE can be divided into HDPE, LDPE, LLDPE, etc.
LDPE is mainly produced by high pressure liquid chromatography method, including kettle process andtubular process, among whichthe tubular technology develops more rapidly. Chinese LDPE production mainly adopts devices of tube type process, exceptone set of Sinopec Yanshan Co. device adopting kettle process of Sumitomo Chemical. Among those enterprises using tubular process, Lupotech T process from Lyondellbasell are dominant in domestic production process, followed by ExxonMobil . In addition, the tubular process technology used by Quantum in the United States, DSM, and Mitsubishi Petrochemical Co. in Japan have been also applied in the Chinese LDPE production.
1、Global LDPE Consumption Grows Slowly
(1) Supply
In the 1960s, PE can be mainly divided into LDPE and HDPE. Because LDPE had the advantages of easy proce- ssing and transparency, its production grew rapidly, and the capacity of which was about three times as that of HDPE. Since the 1970s, with the rapid development of LLDPE, and gradually apply to the LDPE downstreams, LDPE’s growth rates of production and demands slowed down. LDPE market was also influenced by the rapid development of mPE and ethylene-hexene/octene copolymer. At present, the LDPE resin has gradually lose its advantage on output and consumption. In 2013, the global LDPE production capacity was about 20 million tons per year, with the operating rate of 80%. Global LDPE production enterprises mainly include LyondellBasell, Dow, Sinopec, SABIC, ENI, NPC - Iran, IPIC, Westlake, etc.
Asia is the world's largest LDPE production area, the area capacity of which is 6 million tons per year, accounting for 30% of total capacity all over the world. Western Europe ranks the second place, accounting for about 25% of the total, followed by North America with up to about 20% of the total capacity, and the Middle East is the fourth area by total capacity all over the world, accounting for about 5%.
Compared with HDPE and LLDPE, it’s expected that newly expanded capacity of LDPE will be around 3 million tons in the next 5 years, mainly from Asia, the Middle East and Eastern Europe, more than 90% of which will be applied tubular process.
(2) Demand
In recent years, due to the fierce competition and substitution effect of LLDPE, LDPE consumption has grown slowly. In 2013, global economic recovery was accelerated, especially the United States and Japan, LDPE demands grew by 2.3%,reaching about 19 million tons.
The global LDPE is mainly used in film and sheet, extrusion coating, injection molding products, wires and cables, among which the film and sheet material is the largest consumption field, accounted for about 60% of the total consumption.
The LDPE market has been mature. It’s expected that LDPE demand will increase slowly, with an annual growth rate of2%in the next 5 years.
2、Chinese Domestic Supply Is Stable
In 1970, the first set of LDPE device was put into operation by PetroChina Lanzhou Co. in China, with the capacity of 43KTA. After that, Sinopec Yanshan Co., Sinopec Shanghai Co., PetroChina Daqing Co., Sinopec Maoming Co., and Sinopec Qilu Co. began to introduce technology and build LDPE production devices. But the production scale of each device was commonly under 100KTA. From 2000 to 2006, with several sets of LDPE devices, which capacity was more than 200KTA of each, were put into production, LDPE production began to grow rapidly.
During the period of 2007~2013, Chinese LDPE capacity maintained at 1948KTA, mainly affected by the substi- tution of LLDPE in downstream market and slow growth of demands. Moreover, the strict conditions of LDPE production process, and its high investments and production costalso limit its development.
Until now, there are nine LDPE manufacturers in China, and mainly concentrated in Sinopec, PetroChina and CNOOC Shell Companies. Sinopec has 6 production enterprises (including the joint), with the total capacity over 1238KTA; PetroChina has two production enterprises, with 460 KTA capacity; the LDPE capacity of CNOOC-Shell Co. is 250KTA.See Table 1.
Although the domestic production of LDPE cannot meet the demands, leading the gap gradually expanding, there are not many newly and proposed LDPE projects, considering the factors such as LLDPE substitution effects, high production requirements, high energy consumption and high production costs and price, etc.
The production status of LDPE in China during 2002~2013 and its forecasts in the next 5 years are shown in Figure 1.
3、Imports Grow Continuously
In 2002, importing volume of LDPE was about 1.5 million tons. Later, as the growth of domestic outputs and produ- ction capacity of LDPE, and the decline of consumption, imports of LDPE dropped gradually, falling to 708kt in 2008. From 2009, the domestic LDPE outputs and production capacity remained stable, while the consumption increased, leading to continuous rising imports. In 2013, the importing volume reached 1725kt, with an average annual growth rate of 19.5% during 2008 ~ 2013.
In 2013, China’s largest source of LDPE imports of 378 kilotons was Iran, followed by South Korea and Saudi Arabia
LDPE resin imports and exports in China during 2002~2013are shown in Figure 2.
4、LDPE Demand Will Grow Slowly
Price of LDPE is usually higher than that of LLDPE by 10%~15%, therefore, the downstream production enter- prises continuously increase the usage of LLDPE in the production of plastic products in order to save cost, cau- sing LDPE consumption growing slowly. In 2008~2013, domestic LDPE consumption had grown at an average annual rate of 5.2%, much lower than that of LLDPE and HDPE’s two-digit growth rate. In 2013, influenced by the effects of "green hedge" special action taken by the Custom, China's LDPE consumption grew, and the domestic LDPE resin consumption amounted to about 3000 kilotons, with a year-on-year growth rate of 5%.
China's LDPE is mainly used in the industry of film, injection molding products, extrusion coating and electrical wires and cables, and the consumption of all those fields accounted for 97.6% of total consumption of LDPE. In addition, LDPE is also applied in pipes, blow molding products and other fields. Four major application fields of LDPE are analyzed as follows:
(1) Films
LDPE film is mainly used for agriculture, packaging and non packaging. Agricultural film can be divided into mulching films and greenhouse films. In the field of agricultural film, LDPE is always blended with LLDPE, HDPE and other resins.
Because of LDPE’s high prices, it is largely replaced by LLDPE in the fields of agricultural film, non-food packa- ging, and non-packaging area. In the field of food packaging, LDPE has the advantages of high transparency and good sealing performance, so the substitution by LLDPE is relatively not such serious. In order to reduce the cost, plastic film production enterprises continuously improve the proportion of LLDPE and HDPE in the products to replace LDPE under the permitted condition. Therefore, LDPE consumption growth in the field of plastic film has slowed down in recent years.
(2) Injection Molding Products
Materials are in great need for making injection molding products, but the market is mainly occupied by PP and HDPE. LDPE is mainly used for mixing with them to improve the processing property and product performance. Typical applications include toys, household goods and container covers,etc.
(3) Extrusion Coating
LDPE coating material is mainly used in the packaging industry, including the fields of liquid aseptic packaging, composite flexible packaging and others. With China's rapid economic developments and the increasing living standards, people have higher requirements towards products packaging of food and clothing, and monolayer films are often unable to meet their requirements. Through extrusion coating with LDPE resin, various substrates make up the composite products which are waterproof, moisture proof and not easy broken, and thus they can meet various performance requirements and are widely used. Because of the continuous innovation of packaging technology, LDPE is expanding its application in extrusion coating field, and it has been used for the carton coating of milk, fruit juice and other liquid packaging, foil coating, heat coating with multilayer film structure, non-woven paper coating of anti- moisture, and instant noodles packing box coating,etc.
(4) Wires and Cables
LDPE resin is a kind of non-polar and branched crystallized polymer material, the structure of which determines the excellent insulation, and dielectric properties. LDPE resin without modifying has low operating temperature and poor performance in environmental stress cracking, but crosslinking modification which includes silane crosslinking and peroxide crosslinking can improve its performance of heat resistance and resistance to environmental stress cracking. LDPE is used for the insulating layer and the interlayer of wire and cable, with the main application areas including electronics, remote communication, power transmission lines, industrial instruments and the low-voltage wire and cable, etc. At present, domestic insulation materials for power cable of LDPE is mainly used in the cable below 35kv, and the main products include DJ210 and DJ200A produced by Sinopec Shanghai Petrochemical Co.; LD100BW by Sinopec Yanshan Co.; 19E by PetroChina Daqing Petrochemical Co; 510-000 and 535-000 by Sinopec Maoming Co.
However, insulation materials above 35kv mainly rely on imports, such as 4201 by DOW and Borealis, UBEC180 by Ube company in Japan. And also LDPE cable sheath materials imports UBEC600V by Ube company in Japan. Considering there are no domestic ultra-clean PE packaging materials, and the crosslinking degree of LDPE is not high enough, therefore China’s LDPE can’t meet the requirement of highvoltage grades.
From 2008 to 2013, there were no new LDPE projects in China. While production capacity and output remained stable, the LDPE consumption in China continued to grow slowly. Therefore, the import volume of LDPE had been increasing, and the market gap became greater with decreasing self-sufficiency rate. In 2013 China's LDPE supply gap reached more than 1600kt with self-sufficiency rate of only 50%. A large number of coal-chemical newly built projects have taken HDPE and LLDPE in their plan, but there are few new projects of LDPE. However, LDPE resin demands in the future will grow slowly, still facing substitution threat of LLDPE and other resin. Overall, it is expec- ted that China's LDPE market gap will decline, but still at a high level, and self-sufficiency ratewill continue to be higher.