LDPE Procurement Intelligence To Grow Substantially At A CAGR Of 4.63% Till 2030Posted by rahul nikade on April 19th, 2024 LDPE Procurement Intelligence In this LDPE procurement intelligence report, we have estimated the key cost components associated with product production. The total cost structure can be divided into three major heads – direct, indirect, and overhead costs. Direct costs mainly comprise raw materials, labor, energy, equipment and machinery, packaging, and transportation. The major two raw materials required for LDPE include ethylene and additives. Ethylene, with the help of polymerization, forms polyethylene, which then, through different processes, converts to LDPE. Changes in these components can have a significant impact on the total cost structure. For instance, in the European region, in Q3 2023, LDPE prices witnessed a bearish trend due to low demand from the downstream industries. Prices continued to drop and reached USD 1,342/MT (Film grade) in the U.K. in September 2023. The primary reasons for the decline were attributed to the continued low prices of feedstock ethylene, no robust demand for the product in the summer season holidays, and reduced consumer spending as a result of unfavorable macroeconomic conditions such as rising interest rates and continued inflation. In the construction sector, the region also witnessed a reduction in the number of infrastructure projects. Order your copy of the LDPE category procurement intelligence report 2023-2030, published by Grand View Research, to get more details regarding day one, quick wins, portfolio analysis, key negotiation strategies of key suppliers, and low-cost/best-cost sourcing analysis Operational Capabilities - LDPE
Functional Capabilities - LDPE
By Characteristics
Rate Benchmarking Every organization and its procurement team look forward to negotiating the best deal while procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team in getting the optimum rate. The geographical location, scale of business, type of business, and industry served play a vital factor in analyzing the rate benchmarking of the LDPE category. Asia Pacific is one of the leading manufacturing regions for polyethylene and ethylene. Many plastics and polymer manufacturers moved their facilities or operations to China for cost-effective reasons. The abundance of cheap labor, specialized production units, and the presence of multiple manufacturing units spread throughout the country help companies take advantage of economies of scale and have better negotiations with suppliers. For instance, for packaging materials, large corporations such as Nestle, Philips, and Samsung outsource their manufacturing operations. Nestle outsourced its plastic packaging to a specialized manufacturer, which enabled the company to produce more sustainable packaging while maintaining the high quality and sturdiness of the product. Compared to the U.S., China is still considered a world factory. The wages for labor in China can range around USD 5 - 15 per hour compared to USD 35 - 45 per hour in the U.S. On average, it has been found that workers in the plastic film sheet industry have earned USD 1,500 - 1,600 per month since 2020. The cost differences between U.S. and China manufacturing can be almost around 25 - 35%. Differences can vary based on production volume, negotiations with vendors, locations, quality, industry expertise, etc. Supplier Newsletter In August 2023, Megniu introduced all polyethylene yogurt pouch packaging in collaboration with Dow Chemical. The deal used the latter’s proprietary “INNATE TF BOPE” resins to ensure superior packaging. The newly formed packaging enables it to be integrated into closed-loop recycling by using advanced mechanical recycling technology. In July 2023, Mepol Group was acquired by LyondellBasell. The acquiree, along with its subsidiaries, “Polar” and “Industrial Technology Investments Poland,” will be integrated into the “Advanced Polymer Solutions” business unit of LyondellBasell. The APS division of Lyondell mainly manufactures and distributes compounding solutions, including engineered plastics, masterbatches, powders, polypropylene compounds, etc. As a part of circular economy efforts, the deal aims to create recycled compounds using recycled or renewable sources and thereby expand the APS segment. In February 2023, KIRKBI A/S signed a partnership agreement with LyondellBasell. Together, the companies would invest EUR 130 million (USD 140.5 million) in APK A/G. APK specializes in novel solvent-based recycling technology, “Newcyling”, mainly for LDPE. The company intends to increase the production of multi-layer flexible packaging components/materials with the help of this deal. Further, “Newcyling” production plants will be added to increase APK’s manufacturing capacity. List of Key Suppliers
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