Polyethylene Market Trends

Growth Drivers

• Growth in the packaging industry: The report by the World Packaging Organization (WPO) reveals that the global flexible plastic packaging market is poised to reach USD 315.5 billion by the end of 2027. The supply of groceries, drugs, and vegetables & meat through both offline and online channels is increasing the application of flexible plastic packaging materials. High-Density Polyethylene (HDPE) and Low-Density Polyethylene (LDPE) are utilized for flexible packaging, shrink films, and rigid containers. The sustained rise of e-commerce trade, which reached USD 27 trillion in 2022 and is projected to increase at a high pace in the years ahead, is also boosting the demand for lightweight and durable polyethylene items for use in food, consumer goods, and healthcare packaging.
• Expansion in agricultural applications: The demand for polyethylene is increasing in agricultural films, greenhouse cover films, irrigation pipes, and mulch films, among many other uses. The smart farming practices are also fueling the adoption of agri films. The Food and Agriculture Organization (FAO) estimates that global food production is likely to increase by over 60% by 2050. The increase in the agricultural films made of LDPE and LLDPE has the potential for farmers to maximize their crop yield using moisture-retaining films and weed checker films and meet the food demand. For example, according to the Ministry of Agriculture, from 2015 to 2024, 83.46 lakh hectares of land in India have been equipped with micro irrigation under the PDMC program. Such initiatives are likely to ensure a consistent demand for agritech solutions, including polyethylene films.
• Shift toward recyclable and bio-based polyethylene: The strict environmental regulations and sustainability trends are expected to fuel the demand for recyclable polyethylene products in the years ahead. The increasing plastic waste and carbon emissions are driving innovations in polyethylene production. The WPO estimates that the global biodegradable plastics market is likely to cross USD 23.3 billion by 2026. Lower carbon footprint and enhanced composability are key growth drivers for bioplastic sales. Furthermore, consumer awareness and corporate sustainability pledges are pushing polyethylene producers to introduce recyclable and bio-based solutions to attract an eco-friendly consumer base.

Challenges

• Volatility in raw material prices: Polyethylene prices are extremely sensitive to changes in crude oil and natural gas, which are the primary feedstocks.  As noted by the U.S. Energy Information Administration (EIA), Brent crude was at a USD 83/b average for 2023, down from USD101/b in 2022, thus affecting the pricing of ethylene and margins for polyethylene. Rapid changes in feedstock pricing completely change supply contracts and profit-making options, especially in regions such as Asia and Europe, where naphtha-based production reigns dominant. Rapid changes complicate planning for PE manufacturers in pricing and investing over longer timeframes.
• Rising competition from alternative materials: The polyethylene manufacturers are facing strong competition from alternative material producers. Biodegradable polymers, paper-based packaging, and advanced composites are some of the leading alternatives in the market. They all act as a vital substitute in packaging. The sustainability pressures are increasing innovation costs and hampering the sales of conventional polyethylene.