Although it was buffeted by the recession of 2001, linear low-density polyethylene (LLDPE) weathered the storm remarkably well. In fact, LLDPE sales increased 4%, according to chemical industry consultants Phillip Townsend Associates in Houston, Texas. The main reason for the strong showing, say plastics producers, was the burgeoning demand for stretch films, trash bag liners and sealable food pouches—markets where LLDPE's combination of flexibility and strength make it a big contender.

Two factors bode well for the future of LLDPE: One is anticipated double-digit growth of the polymer in the Asia-Pacific region over the next decade. Two is the increased use of metallocene catalyst technology, which promises to yield new grades of ultra-strong LLDPE that will challenge metals, glass and other plastics, particularly LDPE.

Capacity is volatile

LLDPE can be made in a solution or gas-phase process. Worldwide capacity for LLDPE in 2001 was about 28 million metric tons, reports Surinder Bahl, project manager for polyethylene at Phillip Townsend. Actual capacity constantly changes, he notes, because gas-phase LLDPE plants can also make HDPE and frequently shift back and forth. The leading LLDPE producers, in terms of nameplate capacity, are, in descending order, Dow Chemical, ExxonMobil, Basell, Nova Chemicals, BP and Sabic. Beyond the top tier of producers, "there are many, many players in this market," says Bahl. A good number of them, he adds, license gas-phase LLDPE technologies such as the Unipol process from Univation (a joint venture of Dow and ExxonMobil) and BP's Innovene process.

The fastest growing part of the LLDPE sector is resins made with metallocene catalysts, which yield polymers with greatly improved strength and puncture-, tear- and impact-resistance compared to the ordinary resin. The two leading suppliers of metallocene LLDPE are ExxonMobil and Dow. Atofina, Chevron Phillips, Asahi Chemical and Evolue (a Mitsui-Sumitomo joint venture) have also launched commercial grades of metallocene-based LLDPE, while Nova has developed nonmetallocene catalyst technology to produce LLDPE with metallocene-like properties.

Metallocenes lead growth

About 13 million metric tons of LLDPE were consumed worldwide in 2001, estimates Bahl, with North America accounting for 33-34% of this total. About 80% of commercial LLDPE goes into films for packaging, bags and other applications, the Phillip Townsend analyst notes. Other important uses for the polymer, he says, are, in descending order of consumption, injection molded parts, rotationally molded parts, and wire and cable. Meanwhile, metallocene LLDPE consumption exceeded one million metric tons in 2001, an increase of more than 10% from the year before, Bahl reports.

In the growth of LLDPE globally, "one key factor is economic development in underdeveloped nations," says Bob Beil, commercial VP for Dow Polyolefins North America. "As these populations develop a middle-class, and expendable income rises, so does the net consumption of polyolefins." LLDPE is also showing robust sales, Beil adds, because it is often cheaper, lighter and better in physical properties than such packaging competitors as glass metal and paper.

World consumption of LLDPE between 2001 and 2006 will increase on the average of 8% a year, Bahl projects. For North America, he forecasts a 7-7.5% average annual growth rate for the polymer over the next five years.

Playing catch-up

"Producers in 2001 built up their inventories of linear-low, not realizing that the economy was slipping," says Patrick Duke, VP of polymers at petrochemical consultants DeWitt & Co., Inc., Houston, Texas. "Meanwhile [plastics] converters began to slow their buying during the second half of the year."

"Margins were terrible in the past year" for producers, notes Howard Rappaport, director of polyolefins at Chemical Market Associates Inc., in Houston. But with demand picking up, he says major LLDPE suppliers have been trying to recoup their losses in 2002 with a series of price hikes, including a 3¢/lb March increase and recent boosts of 4¢ and 5¢/lb. "We're predicting that linear-low prices will continue to rise until about May or June, then flatten out," Rappaport says. Around July or August, he expects tags to fall, then edge up again in the final months of the year. But unexpected developments, perhaps stemming from tension in the Middle East, could change the price outlook radically, he cautions.