Polyethylene Polypropylene achieves price transfer Polystyrene is pressed by substitute products Polyvinyl Chloride is hot and cold In recent years, the price of crude oil has been rising. The price of crude oil futures on the New York Mercantile Exchange earlier this month hit a new high of US$98.62 per barrel. At the same time, strong global market demand has driven most general-purpose resin manufacturers to expand production in this context. For polyethylene and polypropylene producers, this year's market is particularly gratifying. They have succeeded in transferring the prices of rising oil and raw materials downstream while maintaining a certain profit margin. However, the days of polystyrene producers have not been so good. The price of styrene raw materials has continued to rise. The operating profits and market demand have been squeezed, and the industry has had to restructure.
Polyethylene: Super Factors Supporting Prosperous Markets In the polyethylene market, end-user demand in both industrialized and developing countries is booming, which has played a role in supporting producers' transfer of rising raw materials and energy prices. On October 1, 2007, European polyethylene producers announced that all brands of polyethylene prices have increased by US$40/ton, and the market prosperity cycle is expected to continue into 2008.
The improvement of living standards of residents in developing countries is the most important factor in boosting the growth of global polyethylene market demand. Another important factor is the large-scale business combination that manufacturers in North America, Europe and the Middle East undertake. Saudi Basic Industries has become an important polymer producer by acquiring businesses and establishing new factories in Europe. At the end of last year, it acquired Huntsman’s petrochemical assets in Wilton, UK. At the same time, Basel in Belgium, France’s Total and other European giants are looking to expand into the Middle East.
Polyethylene producers also adopted more strategic sales and expansion strategies. In early 2007, the London Metal Exchange launched a high-density polyethylene futures exchange, making the procurement and budgeting of the product's value chain more transparent. As a major polyethylene producer, Dow Chemical Europe stated that since December 1st, all its grades of polyethylene have been traded in futures.
However, there are some unfavorable factors in the market. PTT Chemicals announced last year that its subsidiary, Bangkok Polyethylene's HDPE capacity will double by 2009 to 500,000 tons/year. This is just one of several large-scale expansion projects already announced in the region. Analysts believe that accelerating supply of growth will soon bring the balance of supply and demand in the Asian market.
Polypropylene: Tensile Raw Materials Cost Increases The global demand for automotive fuels has increased rapidly, driving more crackers to use catalytic cracking units to maximize the production of gasoline and diesel. This led to tight supply of propylene and pushed up naphtha prices. The rise in the price of naphtha has made steam cracking producers tend to produce more carbon 2 components than carbon 3 components.
Like polyethylene producers, polypropylene producers have also succeeded in transferring new raw materials and energy costs over the past year, while gaining the profits they deserve. Analysts believe that polypropylene producers mainly benefit from the strong demand in the downstream market.
Basel, Total and other European polypropylene producers have increased their production costs by €10/t from October 1st on the grounds of increased production costs. Some producers said that the polypropylene market will be more optimistic than the polyethylene market in the long run. Most of the large-scale integrated petrochemical projects that have been announced in Asia and the Middle East are ethylene-polyethylene complexes. Some of these devices produce polypropylene, while others do not produce polypropylene. Moreover, polypropylene producers have less bottlenecks or capacity expansion projects than polyethylene producers. Therefore, from 2009 to 2010, the polypropylene market may not have as many new capacity as the polyethylene market.
Polystyrene: Reduced demand for squeezing by alternatives At the same time, the market for polystyrene has fallen due to pressure from alternative products, and rising raw material costs have further exacerbated corporate conditions.
A person in charge of styrene business at the CMAI, a Houston-based CMAI, believes that poor North American polystyrene product demand is due to high product prices and internal competition for polymer replacements. Overall, as of the third quarter of this year, polystyrene demand in North America fell by 3% year-on-year.
New polystyrene production capacity in Asia and the Middle East will be put into operation in the next few years. The oversupply of the market may lead to the continued weakening of styrene CIF prices, making it more difficult for North American producers to export surplus styrene monomer to Europe or Asia. There may be some changes in the balance of raw materials in the market.
In recent years, with the high international crude oil price shocks and the slowdown in downstream polystyrene demand, the profitability of North American styrene producers has dropped sharply, prompting them to accelerate the pace of mergers and reorganizations. The North American Polystyrene market is about to repeat the merger of the European polystyrene business. North America's six major polystyrene producers will soon become four, mainly because of lower costs and higher efficiency. The merger of Ineos and Nova has been completed. The merger of Dow Chemical and Phillips Chemical's styrene/polystyrene business is also nearing completion. BASF has announced plans to sell the styrene business. Total is the only company in the North American market that currently does not intend to conduct business consolidation.
PVC: Uneven hot and cold around the world European PVC producers face many operational challenges this summer, which provides opportunities for US PVC producers. According to CMAI, in June 2007 alone, the European vinyl chloride monomer production capacity fell by 20%. The price of PVC exported from the United States to Asia has been firm, but it has recently seen a trend of weakness.
PVC in Northeast Asia has the fastest growth rate, especially in the Chinese market. From 2005 to 2010, the annual average demand for PVC in China will increase by more than 8%. Despite the rapid growth in market demand, due to the local production capacity being gradually put into operation, the PVC that China needs to import is showing a declining trend.
From 2008 to 2009, more PVC units will be put into operation. US Shin-Etsu will increase production of PVC by 590,000 tons per year at its chlor-alkali plant in Louisiana. The company said that the expansion can be completed by the end of this year. Georgia Bay Corporation of America stated that it will add a 200,000-ton/year production line to its PVC plant in Louisiana. In 2008, the plant's PVC production capacity will increase to 770,000 tons per year.
Polyethylene: Super Factors Supporting Prosperous Markets In the polyethylene market, end-user demand in both industrialized and developing countries is booming, which has played a role in supporting producers' transfer of rising raw materials and energy prices. On October 1, 2007, European polyethylene producers announced that all brands of polyethylene prices have increased by US$40/ton, and the market prosperity cycle is expected to continue into 2008.
The improvement of living standards of residents in developing countries is the most important factor in boosting the growth of global polyethylene market demand. Another important factor is the large-scale business combination that manufacturers in North America, Europe and the Middle East undertake. Saudi Basic Industries has become an important polymer producer by acquiring businesses and establishing new factories in Europe. At the end of last year, it acquired Huntsman’s petrochemical assets in Wilton, UK. At the same time, Basel in Belgium, France’s Total and other European giants are looking to expand into the Middle East.
Polyethylene producers also adopted more strategic sales and expansion strategies. In early 2007, the London Metal Exchange launched a high-density polyethylene futures exchange, making the procurement and budgeting of the product's value chain more transparent. As a major polyethylene producer, Dow Chemical Europe stated that since December 1st, all its grades of polyethylene have been traded in futures.
However, there are some unfavorable factors in the market. PTT Chemicals announced last year that its subsidiary, Bangkok Polyethylene's HDPE capacity will double by 2009 to 500,000 tons/year. This is just one of several large-scale expansion projects already announced in the region. Analysts believe that accelerating supply of growth will soon bring the balance of supply and demand in the Asian market.
Polypropylene: Tensile Raw Materials Cost Increases The global demand for automotive fuels has increased rapidly, driving more crackers to use catalytic cracking units to maximize the production of gasoline and diesel. This led to tight supply of propylene and pushed up naphtha prices. The rise in the price of naphtha has made steam cracking producers tend to produce more carbon 2 components than carbon 3 components.
Like polyethylene producers, polypropylene producers have also succeeded in transferring new raw materials and energy costs over the past year, while gaining the profits they deserve. Analysts believe that polypropylene producers mainly benefit from the strong demand in the downstream market.
Basel, Total and other European polypropylene producers have increased their production costs by €10/t from October 1st on the grounds of increased production costs. Some producers said that the polypropylene market will be more optimistic than the polyethylene market in the long run. Most of the large-scale integrated petrochemical projects that have been announced in Asia and the Middle East are ethylene-polyethylene complexes. Some of these devices produce polypropylene, while others do not produce polypropylene. Moreover, polypropylene producers have less bottlenecks or capacity expansion projects than polyethylene producers. Therefore, from 2009 to 2010, the polypropylene market may not have as many new capacity as the polyethylene market.
Polystyrene: Reduced demand for squeezing by alternatives At the same time, the market for polystyrene has fallen due to pressure from alternative products, and rising raw material costs have further exacerbated corporate conditions.
A person in charge of styrene business at the CMAI, a Houston-based CMAI, believes that poor North American polystyrene product demand is due to high product prices and internal competition for polymer replacements. Overall, as of the third quarter of this year, polystyrene demand in North America fell by 3% year-on-year.
New polystyrene production capacity in Asia and the Middle East will be put into operation in the next few years. The oversupply of the market may lead to the continued weakening of styrene CIF prices, making it more difficult for North American producers to export surplus styrene monomer to Europe or Asia. There may be some changes in the balance of raw materials in the market.
In recent years, with the high international crude oil price shocks and the slowdown in downstream polystyrene demand, the profitability of North American styrene producers has dropped sharply, prompting them to accelerate the pace of mergers and reorganizations. The North American Polystyrene market is about to repeat the merger of the European polystyrene business. North America's six major polystyrene producers will soon become four, mainly because of lower costs and higher efficiency. The merger of Ineos and Nova has been completed. The merger of Dow Chemical and Phillips Chemical's styrene/polystyrene business is also nearing completion. BASF has announced plans to sell the styrene business. Total is the only company in the North American market that currently does not intend to conduct business consolidation.
PVC: Uneven hot and cold around the world European PVC producers face many operational challenges this summer, which provides opportunities for US PVC producers. According to CMAI, in June 2007 alone, the European vinyl chloride monomer production capacity fell by 20%. The price of PVC exported from the United States to Asia has been firm, but it has recently seen a trend of weakness.
PVC in Northeast Asia has the fastest growth rate, especially in the Chinese market. From 2005 to 2010, the annual average demand for PVC in China will increase by more than 8%. Despite the rapid growth in market demand, due to the local production capacity being gradually put into operation, the PVC that China needs to import is showing a declining trend.
From 2008 to 2009, more PVC units will be put into operation. US Shin-Etsu will increase production of PVC by 590,000 tons per year at its chlor-alkali plant in Louisiana. The company said that the expansion can be completed by the end of this year. Georgia Bay Corporation of America stated that it will add a 200,000-ton/year production line to its PVC plant in Louisiana. In 2008, the plant's PVC production capacity will increase to 770,000 tons per year.