Chicago — The twists and turns of markets for PET, engineering resins and polystyrene recently were mapped out by industry analysts with IHS Markit.
Analysts Tison Keel, Brendan Dooley and Javier Ortiz tackled those topics Nov. 1 at the Global Plastics Summit 2018 in Chicago. Keel said that the global PET market continues to be oversupplied.
"Everyone needs water, but fewer want sugar," he said of the move away from carbonated soft drinks, the largest market for PET bottle resin. "Growth is steady, but operating rates are low and people keep adding capacity."
Keel pegged global PET resin growth at 4 percent in 2018, but he added that North America and Europe are "deselecting" PET. "Growth rates are expected to slow," he said. "It's a structural issue, not only in China. There's too much capacity everywhere."
In North America, PET makers Alpek and Indorama now account for almost 75 percent of total capacity. And in spite of that region also being oversupplied, a joint venture composed of Alpek, Indorama and Far East New Century Corp may complete a massive unfinished PET plant in Corpus Christi, Texas, in the near future.
M&G Group began work on that plant in 2015 before stopping construction and filing bankruptcy in 2017. Cost overruns on the Corpus Christi plant played a role in the Italian firm's bankruptcy.
"If they ultimately build Corpus, older capacity need to be shut down," Keel said. "If not, it will be a buyers' market big time for PET."
North American PET makers also were surprised by the U.S. International Trade Commission's decision to not place place anti-dumping duties on PET imported from Brazil, Indonesia, South Korea, Pakistan and Taiwan. Regional PET makers had argued that low-priced imports from those countries were damaging the market.
Producers now are appealing that decision. Keel said a short-term effect of the ruling could be lower PET prices in North America. He added that imports from those five countries had been replaced by others in the nine-month period when preliminary duties were in place.
Dooley covered outlooks for several engineering resins, including the chaotic nylon 6/6 market, where prices have soared as a lack of adiponitrile feedstock has made that resin hard to obtain.
"Longer-term, nylon 6/6 will be tight until 2020 when the [adiponitrile] supply increases," he said. "Shorter-term, buyers have bid up [6/6] prices to secure supply. We should see higher prices until the economy cools down or processors switch to an alternate material, whether it's recycled [6/6] or metal or another polymer."
Possible replacement moves include carpet makers switching to nylon 6 and office furniture suppliers using recycled nylon 6/6 in star-shaped bases for chairs. Dooley added that some automakers are considering switching back to metal for some parts that had been made of nylon 6/6.
"It's harder for [automakers] to switch to other polymers," he said. "They know how to work with metal, so I don't see a switch to other polymers happening."
In spite of the shortage, Dooley said that emerging applications for nylon 6/6 in the auto market include mounts, ducts, oil pans and charging systems.
Elsewhere, Dooley described nylon 6 as "a quiet polymer, with plenty of capacity." He added that excess capacity — mostly in Asia — has dropped global nylon 6 operating rates to only 60 percent. Nylon 6 makers also are investing in high-performance compounds, he added.
The polycarbonate market is adding major amounts of capacity on a global basis, primarily in China. Global PC production capacity is expected to increase by 11 percent in 2019 and 16 percent in 2020.
These additions could lower operating rates and lead to the closure of older PC plants, Dooley said. PC prices both in North America and globally are expected to decline slightly in 2019, he added.
The PS market, unfortunately, has struggled for most of the year, with North American demand slumping about 5 percent. "That's a little worrisome for consumers and for the industry," Ortiz said.
North American PS production is down 4 percent in 2018, while exports are up about 20 percent. Ortiz said the market is being challenged by higher prices, competition from other materials and environmental pressure.
Polypropylene has taken some business away from PS in rigid packaging, while high density polyethylene has displaced the material in some tubs and containers. Both of those materials have price advantages vs. PS.
North American PS operating rates are just under 80 percent, with demand for 2019 expected to be flat to slightly down. Regional PS pricing also could be "relatively flat" in 2019, Ortiz said.
"Polystyrene is still a wonderful product for the applications it's used in, but it's under pressure," he added.