Polyethylene: Market prosperity will continue into 2008

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　　In the polyethylene market, the strong demand from industrialized and **developing** end-users has helped to offset the rising costs of raw materials and energy for producers. On October 1, 2007, European polyethylene producers announced a price increase of $40 per ton for all grades of low-density and high-density polyethylene. The current boom is expected to continue until 2008, but it will decline from 2009 to 2010. 　 　　Polyethylene producers have also adopted more strategic sales and expansion strategies. At the beginning of 2007, the introduction of futures trading for high-density polyethylene on the London Metal Exchange had a certain impact on the market, making procurement and budgeting across the upstream and downstream stages of the product value chain more transparent. Dow Chemical Europe is one of the largest polyethylene producers. The company stated that it will begin trading futures for all of its grades of low-density polyethylene, linear low-density polyethylene, and high-density polyethylene on December 1. Dow Chemical believes the advantage of futures trading is that the price of the product can be agreed upon with the customer before the product is sold. 　　However, there are still some unfavorable factors in the market. In August 2006, PTT Chemical announced that the high-density polyethylene production capacity of its subsidiary Bangkok PE would be doubled by 2009, reaching 500,000 t/a. This is just one of several large-scale expansion projects that have been announced in the region. Most market observers say that not all of the capacity expansion projects announced in Asia will be completed, but market demand will soften over the coming year, and the rapidly increasing supply capacity will render the prospects for Asia’s polymer market even more bleak.