Plastics Industry Perspective
2nd Quarter 2013
PP and PE supplies are tight. PP
demand down, PE demand up
Polypropylene (PP) demand
continues to drop in
North America and prices
remain volatile. Year to date
PP prices are up approximately
5% from the beginning
of the year, but PP has
experienced both an approximate
23% increase and a
14% decrease in prices over
separate three month periods
in 2013. North American
Sales of PP are down
approximately 5% while exports
are down approximately 40%.
Supplies are currently tight
for both PP and Polyethylene
(PE) due to unexpected plant
outages including an explosion
at a plant in Geismar, La. and
an “emissions event” at a plant
in Baytown, Texas.
PE prices are up approximately
10% for the year and 4%
in the second quarter. Domestic
sales of PE are up approximately
6% and export sales are
up approximately 22%.
In 2012 export sales of PE
represented approximately 20%
of North American PE sales. PE producers are taking advantage
of a low-cost feedstock
position caused by North American
shale gas. North America
is going to experience a capacity
expansion in PE. Current
North American PE capacity is
estimated at 19.4m tonnes/year
and could grow an additional
5.6m tonnes/year between the
years 2015 to 2017. As a result,
some analyst predict by the
end of the decade exports will
represent 40% of all North
American PE sales.
From a longer term perspective
PP is expected to continue to have low demand growth and
price volatility. Somewhere
around 2016 propane dehydrogenation
(PDH) plants are expected
to come on line in North
America. PDH plants will allow
PP feedstock to be generated
from natural gas opposed to
crude oil. At that time price
volatility is expected to decline
and demand for North American
PP is anticipated to increase.
Experts believe until the PDH
plants are operational, PP is
going to continue to have a
difficult time mainly driven by
continued price volatility.
Kevin Duffy is a Senior Inventory appraiser who specializes in the plastics industry. He
has appraised numerous plastics-related companies in North America that are involved
in distributing, compounding and manufacturing resins, films, sheets, and molds. Kevin
received his B.A. in finance from Illinois State University, and passed the CPA exam in
Illinois. Kevin has diverse business experience in
accounting, banking, manufacturing,
distribution, and retail.