Expert: Shale gas won't lower PE prices in 2014

By Frank Esposito
Senior Staff Reporter

Published: January 9, 2014 2:01 pm ET
Updated: January 9, 2014 2:06 pm ET

Related to this story

Topics Materials Suppliers

The changing rules of the polyethylene game will keep resin buyers on their toes in 2014, according to market analyst Mike Burns.

Burns — who is with Resin Technology Inc. in Fort Worth, Texas — recently said in his 2014 PE Outlook that the price of oil "has nothing to do with the cost to make a pellet in North America." But he added that oil prices "have everything to do with the price of the [PE] pellet globally.

"Polyethylene buyers should not expect new lower cost feedstocks [such as those from shale gas] to reduce prices," Burns explained. "PE pellets are priced at the highest global feedstock, and that has created a price floor for PE."

The fact that oil sets the global PE pellet price is one reason why PE prices continue to escalate, he added. Other reasons include supplier consolidation and discipline, inventory and exports and PE no longer being a commodity.

"Higher quality resin and consumer expectations have created highly specified resin requirements," according to Burns. "Flexibility has been reduced for the processor."

Through September, North American PE prices were up an average of 16 cents per pound in 2013, according to the Plastics News resin pricing chart.

U.S./Canadian sales of high density PE for 2013 were up 1.4 percent through October, according to the American Chemistry Council in Washington. Domestic HDPE sales grew almost 1 percent in that period, with export sales up almost 4 percent.

Export sales also improved U.S./Canadian sales results for low and linear low density PE through October. LDPE sales grew almost 2 percent, with a 0.5 percent domestic drop canceled out by export sales growth of almost 11 percent. The picture was similar in LLDPE, where export sales growth of almost 11 percent improved a 1.5 percent domestic growth rate to overall sales growth of 3.5 percent.

Looking ahead to 2014, RTi's Burns said that North American PE prices could remain at January levels for the year's first quarter if there's no significant inventory build in January and February. But he added that he does expect a price increase to be implemented during the first quarter.

"2014 is going to be a demand-driven year," he said. "There's no reason for price concessions if demand remains constant."

Burns also is continuing a Twitter feed that he began in early 2013. The feed — @RTiBurnsPE — offers insight and on pricing and inventory trends for the PE market.


Comments

Expert: Shale gas won't lower PE prices in 2014

By Frank Esposito
Senior Staff Reporter

Published: January 9, 2014 2:01 pm ET
Updated: January 9, 2014 2:06 pm ET

Post Your Comments


Back to story


More stories

Image

China's Shide Group, BASF unveil 'revolutionary' all-plastic window profile

April 23, 2014 9:10 pm ET

SHANGHAI — The PVC window profile market in Asia is expected to increase four-fold by 2025, and Chinese building products maker Dalian Shide...    More

Worker dies in fall at Formosa Texas plant

April 23, 2014 4:04 pm ET

A subcontractor died April 22 after falling 25 feet during routine cleaning operations at a Formosa Plastics Corp. USA facility in Point Comfort,...    More

Image

Milliken expanding SC plant for additional PP clarifying agent capacity

April 23, 2014 3:42 pm ET

American chemical company Milliken & Co. has announced plans for a major expansion in capacity for its Millad NX8000 clarifying agent for...    More

Clariant says Asia holds the key to growth

April 23, 2014 3:52 pm ET

Clariant AG is based in Switzerland, but its eyes are firmly focused further east.    More

Sale of Romanian PVC producer Oltchim assets postponed again

April 23, 2014 1:35 pm ET

The long anticipated privatization of insolvent Romanian PVC producer Oltchim has been postponed yet again, this time until mid-May.    More

Market Reports

Market Data Book - Rankings & Lists

A one-stop download of Plastic News' exclusive annual lists and processor rankings containing essential data including sales, employees, end markets, materials and more.
EXCLUSIVE EXCEL FEATURE: full mailing address details for available plant locations.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report provides analysis and discussions of economic and political conditions, market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as strategies being implemented by thermoformed packaging companies. In addition, there are reviews of 25 leading thermoformers in the packaging segment, assessing their growth initiatives and performance metrics over 10 years.

Learn more

Mold Making and Tooling Review and Outlook 2014 North America

This report provides in-depth analysis of the mold and toolmaking market for North America, including discussions of trends, opportunities, threats, the latest developments in production and labor and equipment trends impacting moldmakers.

Learn more

Upcoming Plastics News Events

May 6, 2014 - May 8, 2014Plastics in Medical Devices 2014

May 12, 2014 - May 12, 2014Plastics News Brazil Pharma Summit

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 3, 2015 - February 7, 2015Plastics News Executive Forum 2015

More Events