Polyethylene Procurement Intelligence Report, 2024 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

Polyethylene (PE) - Procurement Trends

Polyethylene procurement is rising due to its usage in industries such as packaging, construction, and consumer goods. The polyethylene (PE) market is anticipated to grow at a CAGR of 4.1% from 2024 to 2030. According to I.C.I.S’ 2024 report, the global demand for PE increased by 140% from 1992 to 2023. This was an increase of 2.8 million tons on average each year for the same period. The demand for the commodity is mainly driven by its consumption in the packaging of food, beverages, and consumer goods. This is due to its properties, such as durability, easy customization, and moisture resistance. The G20 countries accounted for 78% of global PE demand in 2023. Changing consumer preferences is boosting the demand for on-the-go and secure food packaging globally.

Procurement of bio-based PE is gaining traction with rising focus on sustainable packaging to reduce environmental impact. Bio-based PE is produced from renewable raw materials such as sugarcane and can be recycled. Companies such as LynodellBasell Industries Holdings B.V., and Neste are involved in producing such kind of bio-based PE. Companies are also increasing their production capacity to produce more bio-based polyethylene. For instance, in July 2023, Braskem announced the completion of its 30% increase in production capacity of a bio-based ethylene plant located in Brazil. The capacity of the plant has increased from 200,000 to 260,000 tons per year. The increase in capacity is a significant move in Braskem’s commitment to sustainable development.

Currently, the majority of single-use PE products are being disposed of in landfills, contributing to ocean pollution and posing a threat to marine ecosystems. As a result, researchers are developing new technologies that would help in reducing waste through upcycling. For instance, in 2023 it was reported that Associate Professor Hsi-Wu Wong and Dongming Xie, both faculty researchers in chemical engineering, are currently working on technology aimed at reducing plastic waste through upcycling. This innovative process involves transforming discarded materials into products of greater value than their original form. Their research is further bolstered by a three-year grant totaling USD 463,000 from the National Science Foundation. Moreover, advancements such as the development of new catalysts and processes for more efficient polymerization can enhance production efficiency and quality.

The industry is fragmented in nature due to the presence of various types of PE such as high-density polyethylene (HDPE), low-density polyethylene (LDPE), and linear low-density polyethylene (LLDPE). Companies are continuously investing in new production technologies and increasing production capacities to meet customer needs. Alternative products such as bioplastics, paper-based packaging materials, and others can pose a moderate threat of substitutes in the market. Environmental concerns and regulations regarding plastic usage have increased the demand for eco-friendly alternatives, potentially posing a threat to the demand for the product.

Buyers in the market are diverse and include manufacturers of packaging materials, consumer goods, construction materials, and more. Factors such as market demand and availability of substitutes impact the buyer's responsiveness to price fluctuations. Buyers often engage in negotiations with suppliers to secure favorable pricing or terms, especially in industries with high competition.

Raw material (ethylene), labor, machinery, rent and facilities, and packaging & transportation are some of the key cost components incurred in the production of PE. Other costs are technology, utilities, repair and maintenance, testing and inspection, marketing, and legal costs. Polyethylene is manufactured from ethylene (which comes from petroleum). Thus, changes in ethylene prices impact the production costs and thus the final prices of the product. Raw materials and labor account for a major part of the overall cost structure. The prices of HDPE in North America witnessed fluctuations in the fourth quarter of 2023. The prices initially surged in October 2023 due to rising feedstock i.e. ethylene prices along with strong demand from packaging, automotive, and construction industries. The prices decreased by the end of Q4 2023 to around USD 1,217/MT for HDPE blow molding grade due to decreasing naphtha and crude oil demand in the global industry. Similarly, in Asian markets there were mixed trends as demand in the Indian and Chinese markets also initially declined in the last quarter of 2023. However, the prices elevated in December 2023 due to a recovery in demand in these markets. The prices of HDPE (blow molding grade) settled around USD 944/MT at the end of Q4 2023.

As part of the polyethylene procurement strategy, clients such as packaging companies fully outsource their PE manufacturing. Outsourcing services give clients exposure to procure products of good quality at better prices. China and India are preferred countries for sourcing polyethylene as they are the top-producing countries of the product. The quality and type of PE are major factors in the procurement of the commodity. Outsourcing the manufacturing of the product can help the procurement team in evaluating the quality of the product and making decisions in deciding suppliers of the product. 

Polyethylene Procurement Intelligence Report Scope