Global demand - which drove North American polyethylene prices up in 2007 - may soften the market in 2008, according to an industry consultant.
PE sales in North America were flat in 2007, but prices have increased 27-32 cents per pound since January 2007, said Mike Burns, managing partner of Fort Worth, Texas-based Resin Technology Inc.
The February market prices of PE are 1-4 cents above the highest PE prices ever - in November 2005 following hurricanes Katrina and Rita.
In 2006 through early 2007, high supplier inventory and a low cost to produce PE in North America created a need and an opportunity to export to Asia. PE exports to Asia set a record in the first quarter 2007. It dipped in the rest of the year but still kept U.S. prices high.
Meantime, European supply disruptions, including ethylene and polyethylene, and a weak U.S. dollar opened the window for exports to Europe. North America shipped a historically high number of exports to Europe last year.
International market demand and dollar value, as well as energy costs, will continue to be the driver in 2008.
``We'll probably see some softening of ethylene prices this year. Exports may not play such a role in the market in late 2008 because of new world capacity coming on-line ... Demand levels are hard to predict. With the export slowing down, capacity utilization could be reduced. Resin producers may have a difficult time in the latter part of 2008 keeping inventories balanced.''
Burns spoke at the Plastics Recycling 2008 conference, held Feb. 26-27 in Jacksonville.