Global polypropylene growth likely, despite cost issues

By Frank Esposito
Senior Staff Reporter

Published: March 29, 2013 2:06 pm ET
Updated: March 29, 2013 5:36 pm ET

Image By: IHS Chemical Robin Waters

Related to this story

Topics Materials, Materials Suppliers

HOUSTON — As a plastic material, polypropylene has undergone a shift in price structure and now is competing based on its properties.

PP now is a more expensive material than high density polyethylene in most markets, although it remains less ex- ­pensive than polystyrene, market veteran Robin Waters said at the IHS World Petrochemical Conference, held March 20-21 in Houston. Waters joined IHS as North American polyolefins director in late 2012 after spending several years with global PP leader LyondellBasell Industries.

In spite of this higher-cost status, global PP growth rates are expected to increase from less than 4 percent in 2007-12 to just under 5 percent in 2012-17, according to an IHS projection.

And even though demand growth in North America is expected to remain low, Waters said IHS expects the region to add new PP capacity toward the end of the 2012-17 period — although no capacity expansions have been announced to date.

New capacity is expected because natural gas development, although negatively impacting short-term propylene supplies, also is providing additional propane, which can be converted into propylene.

"There's not a burning desire" in North America for more PP, Waters said. "The propane play is driving [new capacity]. To attract capacity, you have to think in integrated terms, not non-integrated."

North America should be able to export more of this projected new PP capacity, lifting its net export balance from less than 640 million pounds in 2012 to almost 1.1 billion pounds by 2017, according to IHS.

The North American PP field also is expected to benefit from propylene monomer being produced through propane dehydrogenation (PDH) or "on-purpose" propylene production.

Several producers have announced plans for PDH projects, most recently Wil­liams Cos., which will use technology provided by Honeywell to build a billion-pound-per-year-capacity PDH unit in Alberta, Canada.

Only one planned PDH site is connected to an existing PP maker, making for what Waters called "an interesting dynamic" of who will build PP capacity in North America.

The Chinese PP field will have to deal with overcapacity in the 2012-17 period, he added. That nation also will see its propylene supplies increase through use of coal-to-olefins technology.

Western Europe's PP market is expected to struggle in 2012-17 because of lower domestic demand, increased imports and decreased exports, Waters said. Between 4 and 5 percent of the region's PP capacity is expected to be shut down by 2017. Western Europe's PP trade balance is expected to swing from net exports of more than 820 million pounds to net imports of almost 2.6 billion pounds between 2012 and 2017.

During that time, global PP operating rates are expected to decline moderately to the low 80s, with North America's being the highest in the mid-80s.

North American PP prices are expected to continue to show volatility in that forecast period. They'll moderate a bit, Waters said, but volatility won't go away until new capacity creates a larger export market.

IHS expects regional PP prices around the world to align by 2020. The price ratio of PP to HDPE also will come back more in alignment, but new PE capacity will prevent PP from returning to its low-cost position, Waters said.


Comments

Global polypropylene growth likely, despite cost issues

By Frank Esposito
Senior Staff Reporter

Published: March 29, 2013 2:06 pm ET
Updated: March 29, 2013 5:36 pm ET

Post Your Comments


Back to story


More stories

Image

Akro-Plastic buying German subsidiary from Metabolix

October 24, 2014 3:32 pm ET

Akro-Plastic GmbH, a Niederzissen, Germany-based plastic compounder, has purchased the assets of Metabolix Inc.'s subsidiary in Germany.    More

Image

BASF pre-tax earnings rise, but will miss financial targets for 2015

October 24, 2014 10:16 am ET

BASF SE has raised its expectations for pre-tax earnings in 2014 but warned that it would not hit its financial targets for next year.    More

Image

Sabic, Shell cancel expansion for SADAF joint venture in Saudi Arabia

October 24, 2014 9:19 am ET

Saudi Basic Industries Corp. and Royal Dutch Shell have cancelled plans to expand an existing petrochemical joint venture in Saudi Arabia following...    More

Image

Sadara CEO says Middle East now has 20 percent of global ethylene capacity

October 24, 2014 9:33 am ET

Sadara CEO Ziad Al-Labban claims that the Middle East's ethylene capacity is now 20 percent of global production.    More

Image

PolyOne increases quarterly profits despite falling sales

October 23, 2014 4:55 pm ET

North American compounding leader PolyOne Corp. saw its third-quarter profit increase, even as sales fell vs. the year-ago period.    More

Market Reports

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events