Resin markets in review

A number of analysts provided forecasts for various resin markets during the 2014 Plastics Recycling Conference, which was March 11-12 in Orlando, Fla. The information they provided can help recyclers get a sense for how virgin resin production and pricing will affect demand and pricing for secondary plastics.

David Berry of PetroChem Wire, Austin, Texas, detailed the market for polyethylene (PE) resins. He said virgin HDPE (high-density polyethylene) has not decreased in pricing since November 2012 and PE in general has been more up than down in terms of pricing during the same period. Meanwhile, repro (reprocessed or reground) HDPE saw pricing increase by 7 to 8 cents per pound during that same time.

Berry said these higher prices coupled with lower production costs have led to record profits for virgin producers.

PE demand is expected to track the growth in industrial production in North America, he added. According to data reported on the U.S. Energy Administration website, www.eia.gov, industrial production is forecasted to increase by 2.7 percent in 2014 and by 4.1 percent in 2015.

Export volumes for PE reached a four-year high in December 2013, Berry said, while exports grew 4.7 percent overall for 2013. He said exports account for 20 percent of the overall market volume for PE in the U.S., with Mexico consuming most of this material, followed by South America/Brazil. The U.S. is losing market share in Asia and the Middle East, however, Berry added.

When it comes to polyolefin production, Joe Morales of IHS, headquartered in Englewood, Colo., said natural gas-based production has had a clear advantage over crude-based production in light of its lower cost in North America. However, less ethylene co-products are generated through natural gas-based production, he added.

Morales said “salvation” for polypropylene (PP) production is coming in the form of on-purpose propylene production from propane.

He added that PP is the world’s largest polymer, with demand of 219 million metric tons. China accounts for 33 percent of this demand in terms of North American production, Morales added. Global PP demand is forecasted to increase by 28 percent by 2018, he said.

North and South American producers have the highest operating rates in terms of global PP production, while China is building so much capacity in this area that it likely will struggle with operating rates, Morales said.

In terms of North American production of PP, he said domestic sales grew 9 percent in 2013 while exports declined 23 percent. “Our net export position is shrinking,” he added, while domestic demand in South America was increasing, though the region’s domestic production was not.

Regarding PET (polyethylene terephthalate), John Maddox of SBA-CCI, working out of Jacksonville, Fla., said excess capacity is the primary factor to be managed. The U.S. is a net exporter of this material, while China is the largest PET importer.

Maddox said this excess capacity might drive down margins for producers but it will not necessarily drive down prices.

The Plastics Recycling Conference was organized by Resource Recycling, Portland, Ore. The event attracted a record 1,775 attendees from 32 countries, according to the organizer.