Polyolefins beat global economy in 2002

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Polyolefins have grown over 4.5% in 2002, inspite of the current difficult economic conditions prevelant in North America, South America, Europe and Japan. International consultants like CMAI, Maack and Nexant have estimated that polyolefins, consisting of LDPE, LLDPE, HDPE, PP have grown to 88 million tonnes this year from 84 million tonnes in 2002.
Consumption pattern of polyolefins

	MIOT 2001	MIOT 2002	AAGR (%)
LDPE	16.5	16	-
LLDPE	13.5	15	11
TOTAL LD/LL	31	32	3.2
HDPE	22	23	4.5
Total PE	53	55	3.8
PP	31	33	6.5
Total Polyolefins	84	88	4.8

	Capacity		Capacity (MIOT)		Consumption		Consumption (MIOT)		Overall		Overall Capacity Utilization (%)

	2001	2001	2002	2002	2001	2001	2002	2002	2001	2001	2002	2002
PE	66	66	68	68	53	53	55	55	80	80	81	81
PP	38	38	40	40	31	31	33	33	81.5	81.5	82.5	82.5
Total	104	104	108	108	84	84	88	88	81	81	81.5	81.5

Demand increased during the first half of 2002, as compared to the later half. Increasing feedstock prices raised polymer prices substantially in the last quarter of 2002, stalling growth to some extent. Higher feedstock and energy costs have squeezed profit margins of polymer producers. The Middle Eastern region increased its global market share due to cheaper feedstocks as well as increased capacity. Weaker profit margins will continue to influence industry consolidation in 2003.

The fundamentally weaker global economy in the developed regions, with the substantial increase in oil prices during first quarter of 2003 could adversely affect the profit margins and may also lead to lower growth in 2003.