High demand for sustainable materials and a growing focus on the use of recycled LDPE materials are aiding category expansion

LDPE Category - Procurement Intelligence

The LDPE category is expected to grow at a CAGR of 4.63% from 2023 to 2030. The increasing demand for sustainable packaging materials in the polymers and plastics industry is driving the growth of low-density polyethylene. One of the emerging trends is the increasing preference for biobased polymers in LDPE. Packaging waste has unavoidably increased as e-commerce has grown. There is a growing focus on recycling LDPE, HDPE, and plastic waste to create new recycled high-performance LDPE pellets or films. There is an increase in vendor partnerships and collaborations to utilize advanced recycling processes to reduce the CO2 emissions generated during the production of these polymers.

Companies such as Dow Chemical and DuPont, for instance, are focusing on creating packaging materials that can be recycled from the very beginning. For instance, Dow Chemical has been P&G's external business partner since 2019. Recently, in June 2023, P&G China partnered with Dow Chemical to create environmentally sustainable e-commerce packaging, the “air capsule” which uses 40% less material compared to other traditional packaging. This will enable customers to close the loop on packaging waste.

In 2022, in terms of LDPE consumption, Mainland China was the leading country, accounting for 30 – 35% of the total share, followed by Western and Central Europe. 2022 saw LDPE account for 22% of the total demand for polyethylene. The combined demand for LDPE and LLDPE accounted for 56% of the total demand for polyethylene in 2022. Between 2019 and 2022, the highest producers of polyethylene worldwide were the U.S., China, the Middle East, and a few Western European countries.

Changes in the prices of energy also have a significant impact on the total cost of LDPE production. This is because, in many cases, the production of high-pressure co-polymers that utilize LDPE can increase energy consumption which in turn can increase the total cost. Machinery is another vital factor in cost considerations. For instance, a single cavity for injection molding can range between USD 3,000 - 6,000, whereas multi-cavity machines can cost as high as USD 90,000 depending on the scale of production capacity. Both injection molding and extrusion molding technologies are very mature, and suppliers mainly focus on cost reduction, increasing plant scale, and product enhancements.

Suppliers are increasingly focusing on sustainability, recycling initiatives to meet environmental, social, governance (ESG) standards, and various other parameters. A few instances of recent supplier developments are:

• In October 2023, LyondellBasell purchased a 50% ownership of Rodepa Vastgoed B.V. The acquiree specializes in recycling plastic waste. The latter is De Paauw Sustainable Resources’s holding company/firm. Netherlands-based Rodepa’s primary activity is in the procurement, processing, and trading of waste plastic packaging from post-consumer and post-industrial sources. As a part of Lyondell’s integrated hub strategy, the deal is aimed to increase Lyondell’s feedstock of plastic waste. As a result, this would help Lyondell expand the manufacturing and product offerings of its “CirculenRecover” business line.

• In June 2023, AFA Nord and LyondellBasell joined forces to establish a 50:50 joint venture. The main objective is to recycle waste from flexible secondary packaging after sales. LLDPE and LDPE waste will be converted into superior recycled plastic materials for use in flexible packaging by the newly formed JV company, LMF Nord GmbH. It will construct a mechanical recycling plant in Northern Germany and produce 26,000 tons of recycled LLDPE and LDPE grades. Early 2025 is anticipated to be the start of production.

• In May 2023, Dow Chemical entered into a long-term partnership with New Energy Blue in the North American region. The main aim is to use renewable agriculture waste like corn stalks and leaves, to produce bio-based ethylene. As part of carbon reduction efforts, the products made will be used across recyclable applications such as packaging, transportation, and footwear. Under the deal, a new plant will be developed in Mason City, Iowa. It will produce 275,000 tons of corn stover annually. The facility will also produce large quantities of second-generation ethanol and clean lignin which will then be transformed into bio-based feedstock.

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LDPE Sourcing Intelligence Highlights

• The LDPE category is consolidated. The top eight to twelve players dominate the category and account for between 40 – 50% of the total share. However, regionally in China, the industry is currently fragmented.

• The threat of new entrants is moderate to low as companies need a high initial investment to launch a polymer or petrochemical-related product. The threat of substitutes is currently moderate as there is a rise in bio-based polymers. One of the key substitutes available in the market is also LLDPE.

• The largest cost components in this category are raw materials, labor, energy, equipment and machinery.

• In the Asia Pacific and the Middle East region, some of the significant producing countries of polyethylene are Japan, Thailand, Qatar, Saudia Arabia, and the U.A.E. In terms of domestic production, China produced 25.3 million tons of ethylene in 2022. 

LDPE Procurement Intelligence Report Coverage

Grand View Research will cover the following aspects in the report:

• Category Intelligence along with emerging technology and regulatory landscape

• Market estimates and forecasts from 2022 to 2030

• Growth opportunities, trends, and driver analysis

• Supply chain analysis, supplier analysis with supplier ranking and positioning matrix, supplier’s recent developments

• Porter’s 5 forces

• Pricing and cost analysis, price trends, commodity price forecasting, cost structures, pricing model analysis, supply and demand analysis

• Engagement and operating models, KPI, and SLA elements

• LCC/BCC analysis and negotiation strategies

• Peer benchmarking and product analysis

• Market report in PDF, Excel, PPT, and online dashboard versions 

Cost Intelligence Highlights

Grand View Research has identified the following total cost components for the LDPE category:

• Direct Costs

  • Raw Materials

  • Labor

  • Energy

  • Equipment and Machinery

  • Packaging and Transportation

• Indirect Costs

  • Recycling

  • Rent and Utilities

  • Administrative Expenses

  • R&D

  • Marketing and Advertising

  • Taxes and Insurance

  • Others

• Overhead Costs

  • Depreciation

  • Interest

  • Maintenance and Repairs

  • Others

Raw materials, labor, energy, and equipment and machinery form the largest cost components of the LDPE category. 

List of Key Suppliers in the LDPE Category

• The Dow Chemical Company

• LyondellBasell Industries N.V.

• SABIC

• Chevron Phillips Chemical

• BASF SE

• ExxonMobil Corporation

• LG Chem Ltd

• Westlake Corporation

• Formosa Plastics Corporation

• China Petroleum & Chemical Corporation (Sinopec)

• INEOS AG

• Dupont De Nemours Inc.