Low Density Polyethylene (LDPE) is a thermoplastic that is manufactured from monomer ethylene. The first commercial grade of polyethylene was manufactured by Imperial Chemical Industries using a high-pressure process via free radical ethylene. LDPE is a semi-rigid and translucent polymer that has 4,000 to 40,000 carbon atoms. LDPE finds its usage mostly in the packaging industry
LDPE is a commodity product and hence its prices are globally regulated. The market prevalently uses a flat-fee pricing scheme. The cost of LDPE films has been on a constant decrease since the end of 2018.
The global LDPE market was valued at USD 35.6 billion in 2020 and is expected to reach USD 43.1 billion by 2025. The global production of LDPE as of 2020 stood at 25.3 million MT with Asia being the largest producers as well as the largest consumers of LDPE.
The Asia Pacific market, by production, occupies a market share of 31.2% with North America being the second-largest producer. From a consumption perspective, the North American and the MEA markets are supply-surplus regions while the APAC, LATAM, and European markets are trade deficit regions. This trend is expected to continue for the next 2-3 years as well.
The market is expected to grow at a modest 3% –4% CAGR from 2020 to 2025. As such, the cost drivers are limited. Most of the regions employ different sourcing and pricing techniques to maximize their profits. For example, the North American market engages in contract manufacturing and local sourcing but limits its imports of LDPE due to the high cost of imported LDPE. Players in the APAC region mostly engage in spot buying and hence perform competitive pricing to maximize profits. While these factors help maximize profit opportunities, they are not essentially cost drivers.
The high cost of imported LDPE for the North American market is a procurement constraint. Also, there are manufacturing constraints. Most often in contract manufacturing, suppliers are unwilling to enter into a contract if the minimum order quantity is less than 1,000 MT. The contract period is also limited to a one-year period making it difficult for suppliers to plan long term. The COVID pandemic has also proved challenging for the market with supply chain disruptions and the inability to operate at full capacity.
The key manufacturers for LDPE are BASF SE, Dow Chemical Company, Exxon Mobile Corporation, SABIC, Chevron Phillips Chemical Company, LG Chem, Qatar Petrochemical company, etc. The fiber-reinforced plastics market has a fair mix of global players as well as some regional players. However, the market is not more or less consolidated with the top 7 market players occupying over 50% of the overall market share. Grand View Research will help our client identify the best-suited suppliers by mapping their core capabilities and operational efficiency.
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
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
Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.
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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