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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


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%


(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%


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


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)


-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%


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


PE supply trend


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


LDPE capacity increase compared




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)


Longer term perspective


-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


-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


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


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.


Thank you

Lorenzo MeazzaMarket Analyst

[email protected]

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