LDPE Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)Report

LDPE Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

  • Published Date: Jan, 2024
  • Base Year for Estimate: 2022
  • Report ID: GVR-P-10570
  • Format: Electronic (PDF)
  • Historical Data: 2020 - 2021
  • Number of Pages: 60

The pricing and cost analysis helps in deriving and forecasting the actual cost of products or services over the forecast period. It considers all the cost components and provides a competitive edge during supplier negotiations. Moreover, the outcome helps procurement leaders understand detailed and fact-based cost drivers for the category.

In this LDPE procurement intelligence report, we have estimated the key cost components associated with product production. The total cost structure can be divided into three major heads – direct, indirect, and overhead costs. Direct costs mainly comprise raw materials, labor, energy, equipment and machinery, packaging, and transportation. The major two raw materials required for LDPE include ethylene and additives. Ethylene, with the help of polymerization, forms polyethylene, which then, through different processes, converts to LDPE. Changes in these components can have a significant impact on the total cost structure.

For instance, in the European region, in Q3 2023, LDPE prices witnessed a bearish trend due to low demand from the downstream industries. Prices continued to drop and reached USD 1,342/MT (Film grade) in the U.K. in September 2023. The primary reasons for the decline were attributed to the continued low prices of feedstock ethylene, no robust demand for the product in the summer season holidays, and reduced consumer spending as a result of unfavorable macroeconomic conditions such as rising interest rates and continued inflation. In the construction sector, the region also witnessed a reduction in the number of infrastructure projects.

At the end of Q3 2023, LDPE prices in the North American region reached USD 1,289/MT. In Asia, film-grade LDPE prices settled at USD 992/MT at the end of September 2023.

Every organization and its procurement team look forward to negotiating the best deal while procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team in getting the optimum rate.

The geographical location, scale of business, type of business, and industry served play a vital factor in analyzing the rate benchmarking of the LDPE category.

Asia Pacific is one of the leading manufacturing regions for polyethylene and ethylene. Many plastics and polymer manufacturers moved their facilities or operations to China for cost-effective reasons. The abundance of cheap labor, specialized production units, and the presence of multiple manufacturing units spread throughout the country help companies take advantage of economies of scale and have better negotiations with suppliers.

For instance, for packaging materials, large corporations such as Nestle, Philips, and Samsung outsource their manufacturing operations. Nestle outsourced its plastic packaging to a specialized manufacturer, which enabled the company to produce more sustainable packaging while maintaining the high quality and sturdiness of the product.

Compared to the U.S., China is still considered a world factory. The wages for labor in China can range around USD 5 - 15 per hour compared to USD 35 - 45 per hour in the U.S. On average, it has been found that workers in the plastic film sheet industry have earned USD 1,500 - 1,600 per month since 2020. The cost differences between U.S. and China manufacturing can be almost around 25 - 35%. Differences can vary based on production volume, negotiations with vendors, locations, quality, industry expertise, etc.

To gain a comprehensive understanding of other aspects of rate benchmarking, please subscribe to our services and get access to the complete report.

Labor cost is one of the key components of the total incurred costs while offering a product or service. Therefore, an organization must decide on whether the focus category should be retained in-house or outsourced if the organization is providing its products or services at competitive prices. If the organization decides in favor of outsourcing, it must understand the difference in the salary structures of suppliers before selecting a supplier and formulating a negotiation strategy.

According to our research, chemical engineers at LyondellBasell, Chevron Philips Chemical, and ExxonMobil receive a 20 - 30% higher base salary compared to the salary received by chemical engineers working in companies such as BASF, SABIC, and Dow Chemical. However, the year-on-year increment rate in all these companies majorly depends on the Key Result Areas (KRAs).

Organizations may find it cumbersome to track all the latest developments in their supplier landscape continuously. Outsourcing the activities related to gathering intelligence allows organizations to focus on their core offerings. At this juncture, our newsletter service can help organizations stay updated with the latest developments and innovations and subsequently assist in preventing disruptions in the supply chain. We have identified the following developments within the LDPE category over the last two years:

  • In August 2023, Megniu introduced all polyethylene yogurt pouch packaging in collaboration with Dow Chemical. The deal used the latter’s proprietary “INNATE TF BOPE” resins to ensure superior packaging. The newly formed packaging enables it to be integrated into closed-loop recycling by using advanced mechanical recycling technology.

  • In July 2023, Mepol Group was acquired by LyondellBasell. The acquiree, along with its subsidiaries, “Polar” and “Industrial Technology Investments Poland,” will be integrated into the “Advanced Polymer Solutions” business unit of LyondellBasell. The APS division of Lyondell mainly manufactures and distributes compounding solutions, including engineered plastics, masterbatches, powders, polypropylene compounds, etc. As a part of circular economy efforts, the deal aims to create recycled compounds using recycled or renewable sources and thereby expand the APS segment.

  • In February 2023, KIRKBI A/S signed a partnership agreement with LyondellBasell. Together, the companies would invest EUR 130 million (USD 140.5 million) in APK A/G. APK specializes in novel solvent-based recycling technology, “Newcyling”, mainly for LDPE. The company intends to increase the production of multi-layer flexible packaging components/materials with the help of this deal. Further, “Newcyling” production plants will be added to increase APK’s manufacturing capacity.

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Add-on Services

Should Cost Analysis

Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process

Rate Benchmarking

Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier

Salary Benchmarking

Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.

Supplier Newsletter

A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.

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