Upcoming metallocene LLDPE capacity could pressure prices to levels below LDPE

  Metallocene LLDPE resins are well recognized for their excellent dart impact and puncture resistance, superior    
organoleptics, brilliant clarity and outstanding hot tack and heat seal benefits. These characteristics make mLLDPE resins
ideally suited for high-performance film applications such as food and medical packaging, shrink wrap, heavy duty sacks,
medical packaging, other non-food packaging, retail bags and sacks, agriculture film and other non-packaging applications
like insulation and jacketing in wire and cables, geomembranes, synthetic grass.
Though Metallocene resins were introduced over a decade ago, they failed to pick up because several of the initial
advantages came with trade-offs: high costs of the catalysts, followed by expectation of high cost of conversion into
finished products to justify the input costs. Difficulty in processing metallocene linear low-density polyethylene (LLDPE)
into film as compared to the traditional Ziegler-Natta catalyst-based LLDPE or low-density polyethylene (LDPE) was an
added disadvantage. This required chemists and engineers to work to make them acceptable. This endeavour has
succeeded as currently millions of tons of metallocene resins produced enjoy more robust growth than conventional
plastics. Newer developments, overcoming of technical hurdles and new activator technologies are making metallocene
catalysts cheaper to use. Additionally, processors have modernized their equipment- Machinery for multilayer film that
has recently become popular allows metallocene resins to be layered with cheaper, conventional LLDPE. Newer
applications have been developed; such as heavy-duty shipping bags and agricultural film, insulation and jacketing in
wire and cables, geomembranes, synthetic grass. Metallocene catalyst successes have been achieved largely in LLDPE.
About 5 mln tons of metallocene LLDPE was consumed in 2009, nearly 25% of the global LLDPE market, with an
annual growth rate between 10-15% from 2000 to 2005, that slowed to 7-10% thereafter, on account of the global
recession.
Metallocene linear low density polyethylene (mLLDPE) is to get cheaper than low density polyethylene (LDPE), as per
ICIS. C6 mLLDPE is marketed as a premium resin with superior features has been priced at at least US$50/ton over
commodity PE film grades in recent years. However, this year’s global tight supply has pushed LDPE film grade up by
as much as US$100/ton above C6 mLLDPE by the end of October. With the expected rapid rise in mLLDPE capacity
in Asia in the next two years, this situation could exacerbate.
ExxonMobil is due to start up two 650,000 tpa LLDPE plants in Jurong Island, Singapore, by end 2011. Its existing
600,000 tpa LLDPE plant at the same site is expected to focus on C6 mLLDPE production once the new plants come
on stream. Japan's Prime Polymer is expanding its 190,000 tpa mLLDPE plant at Chiba by 20,000 tpa by
debottlenecking process that will be completed around mid-November, and to 250,000 tpa in Q4-2011. LG Chem has
recently reduced high density polyethylene (HDPE) pipe-grade production at its 150,000 tpa plant in Daesan, in favor of
producing C6 mLLDPE. Gas Authority of India (GAIL) is looking at producing around 35,000 tpa of mLLDPE at a new
300,000 tpa PE plant it plans to start up in 2013 at Pata, as demand for metallocene-grade PE continues to advance
in India at a double-digit rate for high-end packaging applications. ONGC Petro-additions Ltd. is planning to produce
35,000-40,000 tpa mLLDPE at its new cracker complex in Dahej, due to come on stream at the end of 2012.
C6 mLLDPE suppliers also face the challenge of competing resins such as C8 mLLDPE as both target multilayer
packaging films. US-based Dow Chemical is the largest C8 mLLDPE exporter to Asia, supplying mainly from its US
plants. Its 300,000 tpa joint-venture (JV) LLDPE plant in Mab Ta Phut, Thailand, operated by Siam Polyethylene,
produces C8 mLLDPE, but that presently caters mainly to the domestic market, say local distributors. Siam Polyethylene,
a 50:50 JV between Dow Chemical and Thai conglomerate Siam Cement, is starting up a new 350,000 tpa LLDPE
plant at Map Ta Phut. This is expected to produce conventional C8 and C6 LLDPE, leaving the company's old plant to
focus on C8 mLLDPE and conventional C4 LLDPE at an 80:20 ratio. C6 mLLDPE suppliers often tackle competition
from cheaper resins such as bi-modal LLDPE and metallocene medium-density PE, as many importers in Asia are
inclined to blend C6 mLLDPE with cheaper resins. C6 mLLDPE producers' aggressive expansion plans in Asia are being
driven by the rapid growth in demand for the product. China consumes and estimated 300,000 tpa of mLLDPE, the
bulk of which consists of C6 mLLDPE. Demand for mLLDPE in China and Southeast Asia is expected to grow at 15-
25% pa in the next five years. Demand in India alone is expected to grow at above 20% pa in the next five years,
particularly because of growth in mLLDPE demand for milk packing. Estimated imports of mLLDPE in fiscal year 2009-