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The polyethylene market is facing increasingly intense supply pressure, especially the existing output and capacity expansion of HDPE are the most, the development direction of polyethylene HDPE market is concerned.

From 2018 to 2027, China’s polyethylene production capacity continues to expand, with the largest expansion in 2020 and the largest planned production in 2025. The expansion is expected to slow down in 2026, and the domestic polyethylene production capacity is expected to reach 54.39 million tons/year in 2027, an increase of 45.19% compared with 29.81 million tons/year in 2022. Each new device is put into operation, it will take 2-3 years to digest the new output. The direct result of a large number of devices being put into operation continuously is that the contradiction between supply and demand continues to increase, the market price continues to fall, and the profit of production enterprises decreases or even loses. The market is also constantly looking for the development direction and consumption outlet of polyethylene after capacity expansion.

In terms of varieties, HDPE has the largest capacity, with an annual capacity of 13.215 million tons/year in 2022, higher than LLDPE’s 11.96 million tons/year and LDPE’s 4.635 million tons/year. In the future, 2023-2027 HDPE expansion energy is also the largest, HDPE capacity is always the highest of the three varieties.

First, the planned maintenance is less and more HDPE device

There are more polyethylene overhaul devices and planned overhaul devices in 2022-2023, and most of them are HDPE devices. It can be seen that HDPE pressure is the largest among the three types of polyethylene. HDPE production pressure, profit pressure is the biggest, seek a way out imminent.

Second, HDPE future development trend

1. Continue to expand production capacity

In 2022, there will be only five polyethylene manufacturers with a capacity of more than 1 million tons, but by 2025, the number is expected to increase to 15, an increase of 200 percent, while the number of polyethylene manufacturers with a capacity of less than 500,000 tons will decrease from 24 in 2022. While the number of polyethylene manufacturers with a capacity of less than 500,000 tons will decrease from 24 in 2022 to 22 in 2025. Production enterprises expand production capacity, optimize the industrial chain, can balance materials, reduce cost and increase efficiency, and improve the ability to resist risks, which is also one of the reasons why production enterprises choose to continue to expand production capacity. HDPE is the largest segment of polyethylene production capacity, and it is also constantly expanding production capacity.

2. Produce niche brands with high profits

HDPE production enterprises can reduce cost and increase efficiency after capacity expansion, but the living space of HDPE devices with small capacity will be squeezed, especially the existing domestic technology level can not produce high-end brands, or plan to switch to niche high-end brands, such as bottle cap materials, IBC barrels, PERT materials. Bottle cap material, IBC barrel and PERT material have developed well in recent years. The domestic output has reached 270,200 tons, 67,800 tons and 60,800 tons in 2022. The compound growth rate of 2019-2022 output is 31.66%, 28.57% and 27.12% respectively, among which PERT material is more promising. Domestic production is expected to reach 470,000 tons in 2025, which will take a large share of imports.

3. Squeeze the share of imports

HDPE imports in 2019-2022 are on a gradual downward trend. HDPE imports in 2022 are expected to reach 6.1 million tons, down 23.67% from 2019, with a compound growth rate of -8.61% for 2019-2022. HDPE production increased from 7,447,500 tons in 2019 to 1,110,600 tons in 2022, with a compound growth rate of 13.94%. HDPE country production is gradually increasing, squeezing the import market share, which is also one of the main trends of HDPE development. However, with the gradual increase of HDPE supply, the HDPE market price trend is expected to be weak, and the HDPE price is expected to drop to 8400 yuan/ton in 2025, down 0.12% compared to 2022.

Therefore, the main contradiction in the supply of polyethylene market, or concentrated in the HDPE varieties, HDPE future development road is very difficult.