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

Formosa to be compensated for Vietnam riot

July 28, 2014 1:44 pm ET

Taiwan's Formosa Plastics Group will receive $2.39 million from the Vietnamese government and insurance companies for damages suffered during the...    More

Image

Ukraine's Group DF may be forced to sell Crimea-based additives plant

July 28, 2014 10:12 am ET

Group DF, the industrial business of Ukrainian tycoon Dmitry Firtash, may be forced to sell off Eastern Europe's biggest producer of titanium oxide,...    More

Image

DuPont resins help take Nike golf balls 'Fore!'ward

July 25, 2014 1:07 pm ET

It may be difficult to imagine just how much science, not to mention rubber and plastic components, go into a golf ball. But global giant DuPont Co....    More

Image

Bioplastics maker wins government funding

July 25, 2014 12:13 pm ET

Canadian bioplastics maker Solegear Bioplastics Inc. has won $1.6 million in funding from the government-sponsored Western Innovation Initiative...    More

Meredian merging with Danimer Scientific

July 24, 2014 1:59 pm ET

Bioplastics maker Meredian Inc. is merging with its sister firm, Danimer Scientific LLC.    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

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

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

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

More Events