CMAI's World Polyolefins Analysis is an annual multi-client market study covering the world Polyolefin markets. Polyolefins (LDPE, LLDPE, HDPE, and PP) represent the largest segment of the global thermoplastics business at approximately 78.8 million metric tons, or roughly 63.0% of the total market. According to CMAI Polyolefin consultants, Howard Rappaport and Bob Dennett in Houston, Graham Harris in London, and Aaron Yap in Singapore, the polyolefins industry experienced an extraordinary global transition during the 1998-2000 time period. Impacting the industry were such factors as poor economy in Asia, unexpected plant outages, high energy costs in North America, inventory swings from converter to producer, large new capacity, changing trade patterns and volatile pricing. CMAI examined the major forces at work in the industry, which contributed to the dramatic turnaround during 1999 - 2000, as well as looks ahead. Global demand for LLDPE, HDPE, and polypropylene is expected to grow in the 6.0 - 8.0 average annual percent range through 2005. These growth rates are 1.5 to 2.5 times that of world GDP for the same period. Per capita consumption for polyethylene and polypropylene resins worldwide is expected to grow throughout the next several years. World polyethylene per capita consumption is targeted to grow from 8.3 kilograms to 10.6 kilograms from 1999 to 2005. A very versatile polymer, polypropylene usage will also grow significantly from 4.8 kilograms in 1999 to 6.4 kilograms in 2005.

Polymer production facilities being built today are significantly larger than they were just a few years ago. The average size of a world-scale plant today ranges from 250,000 to 450,000 metric tons per year. New advances in operating and catalyst technology will allow new and existing facilities to be even more productive in the years to come. Between the year 2000 and 2005, over 15.7 million tons of new polyethylene capacity will be coming on stream worldwide. Worldwide polypropylene capacity is forecast to increase by over 9.0 million metric tons between the years of 2000 and 2005. As new facilities start up in Asia and the Middle East, traditional supply roles will change among regions. Between 2000 and 2005, the number of polyethylene and polypropylene facilities coming on stream in the Middle East will significantly increase the amount of material destined for export. In fact, linear polyethylene (LLDPE / HDPE) capacity in the Middle East will almost double and polypropylene almost quadruple during that time period. Much of the incremental capacity exported from the Middle East will find its way into the European and Asian markets. Korea will continue to be a significant exporter into China between 2000 and 2005. Within North America, additional polyethylene capacity being constructed in Canada will eventually find its way into the U.S. market during the 2000-2001 time period. Polyolefin prices are forecast to remain under downward pressure during most of 2000 and 2001, and begin to recover in 2002. Peak polyethylene pricing is predicted to occur in 2004 and 2005. Polypropylene prices appear to recover in 2002, topping out in 2004. The unprecedented amount of industry consolidations by producers may certainly have a long-term effect on global price patterns.