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Global Polyethylene Outlook
Lorenzo Meazza - Market Analyst
Friday, 09 October 2020
ICIS Global Petrochemicals Outlook Seminar
The impact of coronavirus on global polyethylene demand
Agenda
01
Capacity scaling up in faltering market conditions02
Supply and demand outlook: long-term perspective 03
209 October 2020 ICIS Global Petrochemicals Outlook Seminar
Impact of covid-19 on PE demand
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World Polyethylene demand trend
15%
5%
17%
3%4%
4%
38.1%
14%
PE demand by region in 2019
NORTH AMERICA SOUTH & CENTRAL AMERICAEUROPE FORMER USSRAFRICA MIDDLE EASTNORTH EAST ASIA ASIA AND PACIFIC
(5.0) (4.0) (3.0) (2.0) (1.0) - 1.0 2.0 3.0 4.0 5.0 6.0 7.0
SEA
NEA
AFRICA
FORMER USSR
MIDDLE EAST
S & C AMERICA
N. AMERICA
EUROPE
WORLD
Annual demand growth (2019-2020) before Covid-19
Global GDP growth
2019-2020
+2.8%
409 October 2020 ICIS Global Petrochemicals Outlook Seminar
(5.0) (4.0) (3.0) (2.0) (1.0) - 1.0 2.0 3.0 4.0 5.0 6.0 7.0
SEA
NEA
AFRICA
FORMER USSR
MIDDLE EAST
S & C AMERICA
N. AMERICA
EUROPE
WORLD
(5.0) (4.0) (3.0) (2.0) (1.0) - 1.0 2.0 3.0 4.0 5.0 6.0 7.0
SEA
NEA
AFRICA
FORMER USSR
MIDDLE EAST
S & C AMERICA
N. AMERICA
EUROPE
WORLD
Annual demand growth (2019-2020) - Covid-19 impact
15%
5%
16%
3%3%
4%
39.5%
14%
PE demand by region in 2020
NORTH AMERICA SOUTH & CENTRAL AMERICAEUROPE FORMER USSRAFRICA MIDDLE EASTNORTH EAST ASIA ASIA AND PACIFIC
World Polyethylene demand trend
Global GDP growth
2019-2020
- 4%
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4.5%Global PE demand growth expectation pre-virus
0.15%Current estimated global PE demand growth
A 4.5 Mt demand contraction if compared with the previous forecast
50
60
70
80
90
100
110
120
Dem
and
(M
t)
2019 2020 (pre-virus) 2020 (current)
PE Global Demand 2020 vs 2019
Covid-19 impact on global PE demand
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A 4.5 Mt demand contraction if compared with the previous forecast
-3 -2 -1 0 1 2 3 4 5 6-3 -2 -1 0 1 2 3 4 5 6
HDPE LLDPE LDPE
World PE demand by type, in 2020
19%
36%
45%
World PE demand growth by type (2019-2020)
Covid-19 impact by PE type (global scenario)
709 October 2020 ICIS Global Petrochemicals Outlook Seminar
-3 -2 -1 0 1 2 3 4-3 -2 -1 0 1 2 3 4
HDPE LLDPE LDPE
Europe PE demand by type, in 2020 Europe PE demand growth by type (2019-2020)
Covid-19 impact by PE type (European scenario)
Output
vs
Demand
99%78%
59%
809 October 2020 ICIS Global Petrochemicals Outlook Seminar
29%
31%
40%
65%The share of LLDPE and LDPEdemand for extrusion packaging
49%The overall share of PE demand for extrusion packaging
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
LDPE LLDPE HDPE
Dem
and
sh
are
Extrusion packaging Extrusion non packagingInjection moulding Blow mouldingOthers
Main end-use applications for PE
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PE supply trend
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52%
7%
42%
PE incremental capacity split
HDPE LDPE LLDPE
PE global incremental capacity (2019-2025) by type before Covid-19
38% 38% 10%
HDPE capacity increase compared
with the installed capacity in 2018
LLDPE capacity increase compared
with the installed capacity in 2018
LDPE capacity increase compared
with the installed capacity in 2018
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7.1 MtThe total new annual capacity that was expected to start operations globally in 2020
3.1 MtThe PE capacity that has been delayed or moved to 2021
PE main capacity changes in 2020
HDPE
LDPE
LDPE
HDPE
LLDPE
HDPE
HDPE
LLDPE
HDPE
HDPE
LLDPE
HDPE
HDPE
HD/LLDPE
HD/LLDPE
LLDPE
HDPE
HDPE
Online
Delayed
Q4 2020
0.8
2.43.5
LDPE HDPE LLDPE
North America
0.0 0.0 0.0
LDPE HDPE LLDPE
S&C America
0.0 0.2 0.1
LDPE HDPE LLDPE
Africa
0.0 0.1 0.0
LDPE HDPE LLDPE
Europe
0.4
2.31.8
LDPE HDPE LLDPE
Former USSR
0.0
1.60.9
LDPE HDPE LLDPE
Middle East
0.8
8.5
5.6
LDPE HDPE LLDPE
North East Asia
0.0
2.42.0
LDPE HDPE LLDPE
South East Asia
Total planned capacity additions in 2019-25 (Mt/year)
1309 October 2020 ICIS Global Petrochemicals Outlook Seminar
Longer term perspective
1409 October 2020 ICIS Global Petrochemicals Outlook Seminar
-1 0 1 2 3 4 5-1 0 1 2 3 4 5
70
75
80
85
90
95
100
105
110
115
120
Dem
and
(M
t)
HDPE
LLDPE
LDPE
World PE demand growth by type (2019-2024)
PE demand recovery in 2021 and mid-term outlook
70
75
80
85
90
95
100
105
110
115
120
Dem
and
(M
t)
PE Global Demand 2019 - 2021
2019 2020 2021
A 3.7 Mt demand contraction in
2021
1509 October 2020 ICIS Global Petrochemicals Outlook Seminar
-3%The fall of PE plant utilization rate in 2020 versus 2019
2028When the average PE plant utilization rate is expected to reach 2019 level
PE global incremental capacity (2019-2025)
74%
76%
78%
80%
82%
84%
86%
88%
90%
0
20
40
60
80
100
120
140
160
180
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Mt/
year
PE capacity UR HDPE UR LLDPE UR LDPE
1609 October 2020 ICIS Global Petrochemicals Outlook Seminar
0%
1%
2%
3%
4%
5%
6%
7%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Recycling market penetration outlook
Shares of PE production ex-recycle on global demand
01 Growing shares will come from larger recycling volumes and reduced consumption growth
02 Sustainability issues that existed pre-COVID remain in place.
03 The share of recycled PE is expected to double its rate by 2030
China ban
Covid 19
1709 October 2020 ICIS Global Petrochemicals Outlook Seminar
Demand for PE has been helped by that for consumer non-durable applications like food packaging
Summary
Overall, Covid-19 outbreak completely eroded the expected PE demand increase in 2020
Long-term demand outlook downsized but PE capacity, even with delays, will continue to grow
PE plants utilization rates are expected to reach again 2019 levels only in 2028
18
Sustainability will remain a priority and the long-term outlook for recycled PE is positive.
09 October 2020 ICIS Global Petrochemicals Outlook Seminar