CHICAGO (Nov. 6, 1:25 p.m. ET) — North American polyethylene makers are getting ready to ride a wave of shale gas.
Natural gas from shale rock formations is making the
Vafiadis is global director of plastics for the IHS Chemical consulting firm in
“In the short-term global PE demand may be slowing as
New PE capacity will be fed by massive planned expansions for ethylene feedstock. More than 200 million pounds of new ethylene capacity will come online this year, with more than 2.5 billion pounds scheduled for 2013 and almost 3.9 billion pounds set for 2014. In spite of the new capacity, Vafiadis said that
“Every one of these new ethylene projects seems to have a strong payback,” he said. “On paper, they're viable, and we think most of them will occur.”
Global PE demand growth is set to average 4.7 percent from 2012-17, according to IHS. Growth for the material in Northeast Asia will average 6.2 percent, with North America a bit lower at 2.7 percent, not much above
During that 2012-17 period, global low density PE demand should grow 2.3 percent, with global LDPE capacity increasing almost 18 percent. Demand for high density PE should average five percent growth, with capacity climbing more than 27 percent. Linear low density PE will be stronger still, with annual growth of 5.4 percent and a capacity increase of more than 34 percent.
By comparison, global GDP growth is expected to average 3.6 percent in that five-year period, according to IHS. Among major PE end uses, demand from film/sheet and injection molding is expected to average five percent growth in that time frame.
Most of the new PE planned for
In 2012 and 2013, regional PE supplies should be “relatively tight,” he added, with low producer inventory levels helping to drive prices. But beyond that point, Vafiaidis said that he sees PE's supply/demand balance improving, making it more difficult for producers to raise prices.