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

Consumer products sector sees improving growth

August 27, 2014 12:49 pm ET

It is late summer, and we are already almost two-thirds of the way through the third quarter. But I find myself wanting to bask in the warm afterglow ...    More

Image

Design Stories: Young designers showing the way in adaptive design

August 27, 2014 12:12 pm ET

Amanda Bolton, then 19, decided to change her major at the University of Cincinnati from fine arts to industrial design, creating products for people ...    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

Image

Mission Plastics brings new automated work cell on line

August 26, 2014 4:17 pm ET

Custom injection molder Mission Plastics Inc. and a customer have created a $1.5-million automated work cell for a medical diagnostics product.    More

Image

Canadian thermoformer ICI gets new financial backing

August 26, 2014 3:11 pm ET

Innovative Composites International Inc. (ICI) will get a $1.5 million infusion in the form of a loan and equity funding to cover a corporate restruct...    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