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

PP prices rise 5 cents

August 28, 2014 3:59 pm ET

After a one-month break, volatility has returned to the North American polypropylene resin market, with prices increasing by an average of 5 cents...    More

Image

DuPont fined for 2010 chemicals release

August 28, 2014 1:37 pm ET

DuPont Co. has been fined almost $1.3 million for the release of several chemicals — including plastics feedstock phosgene — at its plant ...    More

Image

LyondellBasell to build feedstock plant on Gulf Coast

August 28, 2014 11:05 am ET

LyondellBasell Industries will build a world scale propylene oxide plant on the U.S. Gulf Coast with a capacity of 900,000 metric tons per year.    More

Image

Bayer seeing success in project to replace petroleum with C02

August 28, 2014 10:18 am ET

Bayer MaterialScience says its research into the potential of using carbon dioxide as a raw material already is paying off in studies showing that...    More

Image

Sony entering recycled PC market

August 27, 2014 11:08 am ET

Consumer electronics giant Sony Corp. is getting into a sideline of selling recycled resins.    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

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

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