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Shale gas may boost PP’s packaging share

By: Bill Bregar

November 19, 2013

ATLANTA — The U.S. shale gas boom will result in increased production of polyethylene and polypropylene, once additional cracking capacity comes on line, said Joel Morales, polyolefins director at IHS Chemical in Houston.

More PE production will have the biggest impact on U.S. blow molding, but for packaging, the spread between PE and PP is not as big as it was a few years ago, Morales told attendees of the Society of Plastics Engineers' Blow Molding Conference.

That means the comparative properties of PE and PP, and not strictly price, will be a bigger factor in deciding which to use.

PP is still not as cheap as PE. But Morales said the volatility of PP pricing will decrease, and pricing should smooth out after the next two years or so.

Still, PP remains a very small portion of the global blow molding market, he said.

The annual SPE conference was held in Atlanta from Oct. 8-9.

Rudy Underwood, the American Chemistry Council's senior director of government affairs, also touted the new strength in U.S. energy production. "We have a very bright future and it's due to the shale gas," he said.

So far, Underwood said, about $100 million in chemical production investments have been announced in the U.S., because of the surge in available shale gas and oil. Some of the money is from direct foreign investment.

The potential is huge, he said: possible chemical industry capital investments of $72 billion.

Morales said PET will not get any real advantages from the shale boom, since ethylene is only small component of PET.

But PET pricing will moderate from 2013-15 because of new capacity coming on in North America and worldwide. PET, which is the largest blow molded resin by volume, globally is going to be "very oversupplied," Morales said.