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U.S. polyethylene export pressure

Views: 6     Author: Site Editor     Publish Time: 2019-08-25      Origin: Site

Source: China Chemical Industry News August 26, 2019

Because the United States has a wealth of low-cost natural gas liquid (NGLs) raw material advantages, American polyethylene (PE) producers are in a wave of large-scale investment. However, because of the gradual intensification of the oversupply situation in the domestic market and the deterioration of the US-China trade relationship, the US PE export market continues to face downward pressure.

Statistics show that in 2019 the United States will add more than 2.8 million tons of PE capacity per year. At the end of July, ExxonMobil opened a 650,000-ton/year new PE plant in Beaumont, Texas. Sasol also opened a 1.5 million ton/year ethylene cracker at its Lake Charles plant in Louisiana. Earlier this year, Sasol started a new 470,000-ton/year linear low density polyethylene (LLDPE) new plant. The company expects to open a new plant of 420,000 tons/year low-density polyethylene (LDPE) at the end of the quarter. The LDPE device was originally scheduled to start in August and has been delayed for 4-6 weeks. LyondellBasell said in a conference call in the second quarter that it is expected to open a new 500,000-ton/year PE plant in Laporte, Texas in the fourth quarter. Formosa Plastics also plans to put into production two sets of PE devices with a total production capacity of 800,000 tons/year.

Lose the largest PE export market

The US PE market has matured, while the demand for traditional US PE export markets such as Latin America is not growing fast enough to absorb the large-scale new PE capacity under construction in the US Gulf of Mexico. Export to the Chinese market.

As of now, China is the world's largest PE importer, but due to the trade friction between the United States and China, China has imposed a 25% tariff on LLDPE and HDPE from the United States.

On August 1, US President Donald Trump announced that he planned to impose a 10% tariff on Chinese goods worth US$300 billion, so that almost all products imported from China to the United States would face tariff threats. The above tariff statement led to a substantial sell-off of related business stocks, while reducing China's demand for US PE products.

Export prices continue to fall

Domestic and foreign difficulties have also brought downward pressure on US PE export prices. The GDP growth of some major emerging markets has been lower than expected, which has also limited demand. US HDPE export prices are showing a downward trend. High molecular weight (HMW) HDPE prices fell 2 cents/lb ($44/ton) to 37 cents/lb to 39 cents/lb. The prices of blow molding grade HDPE and injection molding grade HDPE both fell by 1 cent/lb to 36 cents/lb to 38 cents/lb and 35 cents/lb to 37 cents/lb, respectively.

For most of this year, HMW-grade HDPE has a premium compared to other grades of HDPE, but the current HMW-grade HDPE and other grades of HDPE transaction prices have been very close. HMW-grade HDPE is used to manufacture films. Due to the increasing concerns of governments and the public about the environmental pollution caused by disposable plastics, the demand for HMW-grade HDPE is under pressure. Affected by the sufficient supply, the price of injection molding grade HDPE continues to be lower than other grades of HDPE.

In the LLDPE market, because the oversupply has caused pressure on all grades of LLDPE products, hexene and metallocene grade LLDPE have reduced the premium compared to butene grade LLDPE. American manufacturers have been building LLDPE capacity at a faster rate than other PE products, so LLDPE has been trading at prices lower than HDPE and LDPE over the past year. The price of hexene grade LLDPE evaluated by Anxun is 1 cent/lb higher than that of butene grade LLDPE, and the price of metallocene grade LLDPE (MLLDPE) is 3 cents/lb higher than that of butene grade LLDPE. Industry insiders said: \"In the long run, hexene grade LLDPE is unlikely to maintain a premium over butene grade LLDPE because buyers are used to buying hexene grade LLDPE at a price comparable to butene grade LLDPE.\" Compared with HDPE and LLDPE, the price pressure of LDPE is relatively small. Compared with the new capacity of LLDPE and HDPE, the growth rate of the new capacity of LDPE in the United States is slower. In addition, the US LDPE has been exempted from additional tariffs in the Chinese market.

On July 31, a fire broke out at ExxonMobil's Bay City plant in Texas, which caused the spot price of ethylene to rise, but it has not yet had a similar effect on PE prices. The ExxonMobil Bay City plant has three crackers, with a total ethylene production capacity of 3.64 million tons/year. These crackers supply ethylene to ExxonMobil's PE plant in Montebévue, Texas, which has a total annual production capacity of 2.64 million tons.

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