After more than a year of increases, prices for polyethylene and polypropylene resins are expected to trend downward. Market analysts Nick Vafiadis and Joel Morales of IHS Markit gave their outlooks for PE and PP markets Oct. 27 as part of the online Global Plastics Summit 2021.”
Vafiadis said that COVID-19 and “epic weather events” have constrained production of PE resin and delayed new capacity from coming on. Those conditions have led to higher prices since early 2020, but the market “now appears poised for a correction,” he added.
[…] In North America, about 9 billion pounds in PE capacity expansions are expected in the near future. Most recently, Gulf Coast Capital Ventures — a joint venture between ExxonMobil and Sabic — added almost 3 billion pounds of capacity in Corpus Christi, Texas.
Global PE operating rates are expected to range from the low to high 80s in the near term. Global oversupply was expected to be around 24 billion pounds before the pandemic, but now is projected to be less than 14 billion pounds.
The net result of these moves is expected to be lower PE resin prices. “Prices have peaked and are ready to decline because of new capacity and the resolution of storm outages,” Vafiadis said. “They’ll be mitigated somewhat by higher energy prices, but [PE] prices are at or near cyclical peaks in all regions.”