For most North American commodity resins, 2018 was a good year.
U.S./Canadian high and linear low density PE sales reported major growth in 2018, according to the American Chemistry Council, resulting from larger amounts of new capacity being sold into the export markets as well as domestic sales that have grown at strong rates.
HDPE sales in the region were up 12 percent for the year, according to ACC, with domestic growth of more than 5 percent amplified by export sales growth of more than 42 percent. Domestic HDPE growth for 2018 was led by the pipe and conduit market, where sales surged 14 percent.
In LLDPE, 11-month sales soared more than 24 percent, with domestic sales up almost 5 percent and export sales exploding almost 96 percent. Trash and can liners led domestic LLDPE growth through November, increasing 8 percent. Full-year ACC totals for LLDPE recently were revised, but still showed growth in those end markets.
Regional sales of LDPE grew at lower rates in 2018, rising just over 7 percent. Flat domestic LDPE sales were boosted by a gain of more than 26 percent in exports. Domestic LDPE growth in 2018 was led by food packaging film, which grew more than 4 percent.
PE exports from the U.S. and Canada should remain strong in 2019, according to Esteban Sagel, principal of the Chemical & Polymer Market Consultants consulting firm in Houston.
“We're getting additional [PE] capacity in 2019 and beyond, so we'll see a continuation of that [export] trend,” he said. “We'll have to be creative and ship to other countries besides China because of the tariff situation.”
Sagel added that the cost position of North American PE based on ethane from natural gas — compared to naphtha from crude oil — is an advantage for U.S. PE makers.
“There are many potential factors, including a possible crash in the price of crude oil, but none of them should be sufficiently big enough to cause that [North American] advantage to disappear,” he said.
Consumer confidence also has improved in the region, Sagel added, which should help drive domestic sales of products made from PE.
PE market analyst Paul Bjacek of Accenture Research in Houston said in an email to Plastics News that the renaissance of PE resin used to make plastics “continues to thrive on the cheap shale gas boom in the U.S.”
But he added that as PE production continues to come online from newly expanded chemical plants on the U.S. Gulf Coast, PE makers are changing their export plans.
U.S. exports of HDPE and LLDPE — both of which are under expansion in the U.S. as well as targets of China tariffs — have risen more than 50 percent since October 2016 and have more than doubled in the past five years. But Chinese tariffs have sent U.S.-made PE to rising economies in Vietnam, Malaysia and Indonesia.
Bjacek said that while this is a new trend, it may be relatively short-lived, since new PE plant expansions are expected to come online in Vietnam, Indonesia and Malaysia in the next few years, producing “stiff competition” for U.S. PE exports.
“Now, more than ever, PE producers need to maximize supply chain efficiency as cost curves may be flatter, depending on oil prices, and every bit of cost competitiveness will be needed,” Bjacek added. “They also must keep a close eye on U.S. ports, including the Port of Houston, where pressure to limit large container ships movements could hinder the flow of plastics through the port, raising the cost of moving resin.”