Before he got to talking about prospects for polyethylene and polypropylene, Howard Rappaport had to dispel a few myths.
Rappaport, global plastics business director with Chemical Market Associates Inc. in Houston, took a look at the role plastics plays in U.S. consumption of crude oil and natural gas.
In spite of plastics being labeled by environmentalists as a big consumer of these resources, CMAI found that plastics used just under 3 percent of the region's crude oil consumption in 2008 and slightly more than 1 percent of its natural gas consumption in that same year.
Both of those numbers are far less than what anti-plastics activists would lead the public to believe, Rappaport said at the 2010 Plastics News Executive Forum, held March 7-10 in Tampa.
He then moved on to PE and PP, two massive markets that affect many plastics processors worldwide. North American PE currently is feeling the repercussions of shutdowns affecting almost 20 percent of the region's ethylene feedstock capacity. The market also is recovering from a 2009 year in which China sucked up all the extra polyethylene from the global market, according to Rappaport. North America shipped every extra [PE] pellet overseas, he said.
But the U.S./Canadian regional PE field is expected to bounce back and average demand growth of about 2 percent through 2014. That's after demand fell almost 13 percent in 2008 and more than 3 percent last year.
Delays affecting new PE capacity in the Middle East also helped keep global markets tight in 2009, but Rappaport said that capacity eventually will arrive since there's hardware in the ground, even after a year or year and a half of delays.
In PP, Rappaport pointed out that propylene monomer remains in short supply because of the use of lighter, natural-gas-based feedstocks that produce less propylene than do heavier, crude-oil-based feedstocks.
As a result, PP prices are rising and the material is becoming an expensive choice in some applications, he said.
Global PP operating rates should improve from 78 percent to 88 percent by 2014, helped in part by more than 2 billion pounds of North American capacity being removed since 2007.
Polypropylene was significantly cheaper [than other commodity resins] for a number of years, but now it's climbing back, Rappaport explained. I don't think that in the long-term we're going to see it have the cost advantage it used to have.
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