Polyolefins Continue to Rally in US, Manufacturers Link it with Firm Feedstock and Tight Supply
- Journalist: Robert Hume
After announcement by Dow Chemical and Equistar Chemicals to increase the price of all their Polyethylene (PE) products by USD 110 per MT, the global polyolefins market is expecting similar price hikes from other producers as well. The upward rally in the prices of PE resins is likely to continue even in May as the giants have announced fresh increases with effect from 1st May 2021.
According to market participants, significant rise in PE prices is in lieu of a combination of factors which include rise in raw material cost and its limited availability, transportation lags, and recent outage at Ethylene crackers located in Texas and Louisiana.
The extended gains are a direct consequence of outages heard in the Ethylene crackers in the US Gulf region. Spot Ethylene prices have made a significant jump in the past few weeks. While Ethylene prices were hovering around USD 1098-1158 per MT during the week ending 9th April, the same were last assessed on 16th April at USD 1380-1512 per MT.
A trader mentioned that the current market situation for PE is highly volatile and trading is still affected due to limited supply from the US. Downstream demand is robust due to healthy virgin plastic demand for food packaging and consumer applications, strongly supporting the price increases.Demand for Propylene and Ethylene Derivatives such as Polypropylene (PP), Acrylonitrile, Cumene and Glycols has been growing since the winter storms hit the coast.
As per ChemAnalyst, the strong pricing environment could weaken in the H2 2021 as America’s existing capacities continue to return onstream and new capacities come online. Enterprise’s Propane dehydrogenation (PDH) plant, constructed by the partnership of LyondellBasell and Enterprise Products Partners L.P. restarted in the last week March and with the already online PDH units of Dow and Flint Hills Resources, Propylene production is expected to be at its pinnacle in the forthcoming quarters. However, the market will continue to face delays in the already laid capacity expansion plans, that may keep the supply relatively balanced while the demand fundamentals are expected to keep outpacing the supply.