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

A. Schulman reports growth in sales and profit

October 22, 2014 7:58 pm ET

Executives with materials maker A. Schulman Inc. have to be smiling after seeing full results for the firm's 2014 fiscal year.    More

Image

PolyOne takes on LED lighting

October 22, 2014 4:23 pm ET

PolyOne Corp. is making inroads into LED lighting applications with its Therma-Tech-brand material technology.    More

Image

Bergen International adds manufacturing space, extrusion line

October 22, 2014 3:42 pm ET

Chemical foaming agent manufacturer Bergen International LLC recently doubled its manufacturing capacity, added an extrusion line and laboratory...    More

Image

DuPont materials taking more ground in auto, medical, electronics

October 22, 2014 2:41 pm ET

Materials made by DuPont Co. are making inroads with products ranging from auto coolant pipes to circuit breakers to surgical devices.    More

Image

Ford's final ACH plant, injection molder of HVAC systems, to close

October 22, 2014 1:58 pm ET

Ford Motor Co. will shed the last line of business in 9-year-old Automotive Component Holdings LLC by December when ACH closes its Plymouth, Mich., cl...    More

Market Reports

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 million dollar plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

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

Upcoming Plastics News Events

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

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

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events