More PE, PP capacity should mean lower prices, more competition

By Frank Esposito
Senior Staff Reporter

Published: March 27, 2014 4:51 pm ET
Updated: March 27, 2014 4:55 pm ET

Related to this story

Topics United States, Polyethylene, Polypropylene, Materials Suppliers

HOUSTON — New North American polyethylene capacity eventually will mean lower selling prices for that material. While in polypropylene, new supplies of propylene monomer will lead to some new resin capacity as well, making the material more competitive vs. HDPE.

Those were among the primary messages from market analysts Nick Vafiadis and Joel Morales at the 2014 IHS World Petrochemical Conference in Houston. Both Vafiadis and Morales spoke at the event March 27.

At least 14 billion pounds of new PE capacity are anticipated for North America by 2018, as producers look to capitalize on growing supplies of low-cost natural gas feedstock in the region.

That amount is more than the domestic market will be able to absorb, so part of that new capacity will need to be exported. As North American exports move beyond traditional South American markets, Vafiadis said PE prices are likely to decline.

“There’s no way that [export expansion] will not have an effect on North American prices,” he explained.

The new PE also should lead to expansion among the ranks of North American processors, according to Vafiadis, with some work returning to the region from overseas. IHS expects PE demand from the pipe and profile market to average annual growth of more than 5 percent from 2013-18. Annual PE growth in rotomolding, injection molding and film and sheet is expected to be at least 4.5 percent in that period.

In PP, new supplies of propylene monomer from PDH technology will change that market’s dynamics, Morales said. “North American prices will become more competitive for the North American converter,” he added.

And although only one PP expansion project has been announced for the region, IHS expects that about 3 billion pounds of new capacity eventually will be added in the next several years.

This change also will lead to increased PP exports from North America. The region’s PP trade surplus was only about 600 million pounds in 2013, but that total is expected to be near 2 billion pounds by 2018.


Comments

More PE, PP capacity should mean lower prices, more competition

By Frank Esposito
Senior Staff Reporter

Published: March 27, 2014 4:51 pm ET
Updated: March 27, 2014 4:55 pm ET

Post Your Comments


Back to story


More stories

Image

New medical firm buys Clairson Plastics

September 19, 2014 4:33 pm ET

Custom injection molder Clairson Plastics is being sold to a new start-up that plans to dive into the medical market with a new dialyzer, a key...    More

Image

Dunkin' Donuts looking at PP to replace foam cups

September 19, 2014 3:22 pm ET

Dunkin' Donuts is testing a new polypropylene coffee cup that the company believes could help boost recycling.    More

Image

Plasan investing in capacity, jobs to supply auto market with carbon fiber

September 19, 2014 3:05 pm ET

Growth in the emerging automotive market for carbon-fiber composites has spurred a $29 million investment in a Walker, Mich., factory    More

Image

Hong Kong's TK eyes expansion, may buy Nypro Tool operation

September 19, 2014 2:49 pm ET

Hong Kong-based mold maker and plastics processor TK Group (Holdings) Ltd. said it's reached a tentative agreement to buy a tooling factory in...    More

Exo-s buys injection and blow molder in Mexico, expands footprint

September 19, 2014 2:15 pm ET

Custom molder Exo-s Inc. has bought an injection and blow molding operation in San Juan del Rio, Querétaro, Mexico.    More

Market Reports

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

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

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

Upcoming Plastics News Events

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

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

More Events