Polyethlenes (PE) have grown from 30.5 million tonnes in 1990, to about 51 million tonnes in 2000, at an average growth rate of 4.8%. Capacity utilization, therefore, has been reduced from 90% in 1990 to 78% by 2001. Consumption has grown by almost 21 million tonnes, while capacity has increased by 31.5 million tonnes.

Capacity has grown from 34 million tonnes in 1990 to 65.3 million tonnes in 2000. It has increased significantly in the Middle East and Asia-Pacific region. The same trend is going to continue for the next four years.It is predicted that almost 10 million tonnes capacity will be added, against an increase in consumption of about 9.5 million tonnes. Capacity utilization, therefore, will not improve very significantly until 2005. In fact, surplus supply of almost 20% will continue thereby providing price stability. The massive increase in capacity during 2001-02 is expected to put considerable pressure on price during these two years.

Among the Polyethylenes, LLDPE and HDPE, capacities as well as consumption, are expected to increase significantly. LDPE capacity, of not more than one million tonnes is likely to be added out of the total of 10 million tonnes.

The decade of the nineties, is characterized by major restructuring, in order to optimize profitability. In fact, the top 10 PE producers in 2001, now account for almost 47% of the total global capacity.

Dow and Exxon Mobil, the two largest PE producers having almost 13.5 million tonnes capacity, account for more than 20%of the global capacity of 65 million tonnes. This capacity, is spread among 134 producers, with an average capacity of almost 500KT. In fact, more than 50% of the producers have less than 250KT capacity. The average size of PE plants, has increased considerably over the years to achieve better cost performance.

The PE business is and will remain essentially cyclic in nature, mainly due to investment and inventory adjustment cycles.During the last decade almost two cycles have been witnessed.
From a high peak in 1990, PE prices passed to the deep trough in 1993 before reaching another peak in 1995.
Another trough was experienced in 1998. Since then prices have firmed more, due to increased cost of feedstocks. Interestingly, the range of high peak and low trough keeps reducing. This could imply that the PE cycle is getting shorter and less intense in terms of the amplitude.

The tremendous surplus of PE from the Middle East and the increasing demand in Asia, particularly in China, India and some other countries, would play a major role in the PE business in the next few years.