North American buyers of polyethylene and polypropylene resins will continue to see some challenges in 2025, according to analysts at Resin Technology Inc.
During a recent 2025 forecast webinar, market analyst Brian Balboa said markets for those and other resins were volatile in 2024 because of geopolitical issues in Ukraine, Israel and the Red Sea. He added that, entering 2025, petrochemical markets "have ample inventories of oil, natural gas and resin, as the global economy searches for growth."
Resin availability was improved in 2024 by a third consecutive mild hurricane season on the U.S. Gulf Coast, resulting in what Balboa called "lots of resin and a glut of feedstocks." Potential U.S. tariffs on Canada, Mexico and China also could affect resin markets in 2025, he added.
In PE, market analyst Kevin Mekaru said that market saw "minimal price erosion" in the second half of 2024. "Global demand is still soft, with major industries facing economic headwinds," he added.
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Going into 2025, PE inventory builds "far exceed" forecasted downtime and demand requirements, according to Mekaru. Although ethylene feedstock levels "got back to normal" in the fourth quarter, Mekaru said PE inventory levels were up 1.2 billion pounds vs. the prior year.
"There's a disconnect between [PE] inventories and pricing nominations going into 2025," he added. Contract negotiations for 2025 will be challenged by a significant drift from pricing fundamentals."
In PP, four force majeure production outages kept North American copolymer supplies tight through 2024, according to market analyst Paul Pavlov.
Prices for polymer-grade propylene (PGP) feedstock were high going into 2024 because of outages in late 2023, Pavlov said. But as those outages ended and the force majeures were lifted, PGP became more available and PP prices fell in the second half of 2024.
Domestic PP demand grew 3.3 percent in 2024, allowing the market to consume 500 million additional pounds of PP. Pavlov said healthy PP inventories and improved PGP supplies could compress PP/PGP margins for 2025 contracts.
"U.S. [PP] producers have a lot of capacity lying around, if demand comes back in a strong way," he said, adding that current North American PP operating rates are at 78 percent, a relatively low level.
North American PP makers added 2.2 billion pounds of capacity in late 2022 and another 100 million pounds in early 2024. An addition of 550 million pounds planned for 2025 has been delayed, according to Pavlov. Current domestic PP capacity now stands at almost 22 billion pounds per year.
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