Polyethylene model update: Key insights on 2024 PE market trends and challenges

Argus Consulting models polyethylene (PE) supply, demand and trade for nearly 90 countries and monitors and forecasts capacity at the project level. Updates are published twice a year in Argus Polyethylene Analytics. As we finalised the 2024 balance, a few things stood out.

PE market performance in 2024 was moderate, with global demand growth slowing to 2.2pc, a 1 percentage point decrease from 2023. Growth trends were relatively stable across the three primary PE grades, with HDPE and LDPE each growing by 2.5pc, while LLDPE expanded by 1.8pc.

Unsurprisingly, the growth slowdown was driven by weak macroeconomics in China, where PE demand grew at only 1.2pc. The country accounts for 34pc of global demand. But macroeconomic challenges were not limited to China. Most regions, especially mature economies, have seen slow demand growth in the past three years.

Despite the overall slowdown in PE demand growth, two regions — Latin America and the Caribbean (LAC), and south Asia — showed significant growth, with rates of 11.8pc and 7.2pc, respectively. LAC's demand growth was primarily propelled by Brazil, driven by rebuilding efforts in Rio de Janeiro following severe floods. But in a global context, LAC demand accounts for only 6pc of the global demand. In south Asia, India's large and growing population played a central role in bolstering demand. But despite last year’s strong growth rate, demand slowed from the historical three-year average of 15pc. This was mainly down to reduced demand for HDPE pipes and all associated PE materials used in extensive nationwide water infrastructure improvements that sustained strong demand previously.

Nearly all PE production growth in 2024 came from North America, with most of the surplus directed towards the export markets, elevating North American PE exports to record levels. Production in the US and Canada rose by 1.6mn t and 0.5mn t, respectively, representing 85pc of the global production increase of 2.5mn t. This was driven by new facilities in the region, including Shell Chemicals Monaca, Bayport Polymers Bayport and Nova Chemicals in Sarnia.

The Middle East, a key competitor in the export market, experienced flat export activity last year versus 2023, which was down by 5pc from 2022. This was the result of subdued global demand growth. Middle Eastern demand is primarily export-driven, making the region particularly vulnerable when global demand slows down.

Geopolitical disruptions in the Red Sea, marked by shipping attacks, significantly constrained trade flows and reduced PE exports from the Middle East. This presented an opportunity for North America to address some of the unmet export demand.

North America and the Middle East benefit from access to cost-advantaged ethane, enabling them to maintain strong competitive positioning in the export market. But North American domestic consumption remains robust despite market saturation, while the Middle East primarily relies on exports because of limited local demand. Forward expectations are for Middle Eastern PE exports to recover and grow in tandem with production, driven mainly by their advantaged economics.

The industry is in an era of weak demand and a volatile global landscape influenced by significant macroeconomic challenges, including elevated tariffs and persistent geopolitical conflicts. Looking ahead, shifts in trade flows and the emergence of new trade routes are anticipated as a direct response to these dynamics. But we expect the US and the Middle East to retain their positions as leading exporters driven by their advantaged economics.

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Author: Dhanish Kalayarasu