Low density polyethylene demand has come under pressure in Asia, as end-product converters are increasingly replacing the resin with cheaper alternatives, industry sources said Monday.
"With C6 [metallocene] LLDPE prices mid-way between C4 [butane] LLDPE and LDPE prices, buyers are switching to C6 LLDPE," a regional producer said. "Especially for multi-layer extrusion purposes," which includes packaging material such as bags used to contain bread.
Converters typically use a combination of C4 LLDPE and LDPE for the end- product, but now C6 LLDPE can be used as a substitute for LDPE in certain applications as it's price is below LDPE's.
Industry sources said the recent trend has lowered demand for general purpose grade LDPE by 10-20% over the last few months. They pointed out that other LDPE grades, such as heavy duty and lamination grades, are not affected by the swing to C6-based LLDPE.
"You can switch to C6 LLDPE in most general purpose applications," another producer said.
Meanwhile, a trader pointed out that "not many people are interested in buying LDPE, and if they really need cargoes, they'll buy in small quantities."
Platts on Monday assessed C4-based LLDPE at $1,325/mt CFR Far East Asia. C6-based LLDPE typically commands a $100-150/mt premium over its C4 variant, according to market sources.
In comparison, LDPE was assessed at $1,539/mt CFR Far East Asia on Monday.
"Increasingly, LDPE is seen almost like an additive," joked one source, who said that his factory adds only about 10% of LDPE resins in required applications, "or replace with C6 LLDPE."
