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United States Petrochemicals Report Q3 2011
Business Monitor International, June 2011, Pages: 91
United States Petrochemicals Report provides industry professionals and strategists, corporate analysts, petrochemical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United States's petrochemicals industry.
The US is building on its cost advantages in ethane feedstock with the development of shale gas reserves promising to lead to a revival in investment in cracker capacity over the next five to seven years, according to BMI’s latest US Petrochemicals Report.
In Q111, sales and captive use of major plastic resins totalled 18.45bn lbs, up 2.7% year-on-year (y-o-y). Production of major plastic resins totaled 18.41bn lbs, an increase of 1.2% y-o-y, implying a net import requirement of 40mn lbs. The most dynamic segment was PVC, with sales growing by 6.2% to 3.58mn pounds, leading to 6.3% growth in output to 3.52mn pounds. This was partly due to the stimulus package that BMI estimates generated 1.6% growth in construction in 2010, as well as restocking and a rise in PVC cargoes to Europe. In addition, the housing market is close to a bottom but shows very few signs of a sustainable recovery, so there is a distinct possibility of PVC sales and production growth falling in H211.
LLDPE and LDPE saw divergent trends in sales, with growth of 1.2% and -1.3% y-o-y to 3.39bn lbs and 1.71bn lbs respectively, leading to output growth of 0.3% and 3.5% y-o-y to 3.48bn lbs and 1.77bn lbs. LLDPE benefited from the competitiveness of US PE output in Asian markets. LLDPE output has been highly robust and resilient to the recession due to its increased use in a broader range of packaging applications, largely at the expense of LDPE. The PS segment saw a stronger recovery from a lacklustre year in 2010 with Q111 sales growing 15.0% y-o-y to 1.38bn lbs and output growing 8.6% to 1.39bn lbs. While HDPE sales were robust with growth of 6.1% to 4.38bn lbs, output grew just 0.5% to 4.25bn lbs, meaning that demand growth largely benefited imports. The worst performing segment was PP, with sales down 4.1% to 4.01bn lbs and production falling 4.8% to 4.0bn lbs.
Polymer resins output growth of around 3.4% in 2010, following significant declines in the previous two years, was below far lower than we had expected and continues to lag behind trends in the overall economy. The rebound will moderate further in 2011 and 2012 and output may not return to pre-recession levels until 2012 at the earliest. We have raised our forecast for real GDP growth in 2011 to 2.6% from 2.9%.
After a period of stagnation and decline, the improved cost position of US petrochemicals bolstered by shale gas discoveries has prompted a flurry of interest in new cracker capacity. Growth in ethane availability paves the way for a potential cracker in the northeast, where the Marcellus shale reserves could support a world-scale plant, in addition to those recently announced by CP Chem and Dow Chemical. Bayer recently announced it is considering selling or leasing its property in West Virginia to develop an ethane cracker using ethane feedstock from Marcellus. CP Chem is considering a 1mn tpa cracker at a Gulf Coast site by 2016-17. Formosa Chemical is evaluating plans to boost ethylene capacity at its Point Comfort, TX facility by about 450,000tpa, probably in 2015. Westlake Chemical says it will expand ethane-based ethylene capacity at Lake Charles, LA by 105,000-110,000tpa by end- 2012. A second Lake Charles expansion will be completed by the end of 2014, although the size of the expansion was not disclosed. Cracker restarts include a 225,000 ethylene plant at Eastman Chemical’s Longview, TX site. Dow’s olefins expansion plan also includes the addition of 2.3mn tpa ethylene capacity through the restarting of its St .Charles complex at Hahnville, LA plant by end-2012, improving or increasing feedstock flexibility at its Plaquemine, LA and Freeport sites by 2014, debottlenecking its Channelview and LaPorte, TX crackers and by building a world-scale ethylene plant on the US Gulf Coast by 2017.
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