IHS has said that the supply of inexpensive natural gas based feedstocks in North America is having a direct impact on the production of ethylene, which is the biggest chemical building block for a number of plastics, including polyethylene (PE). PE is the largest volume plastic in the world, with applications including packaging films, grocery and shopping bags, toys and containers.
Nic Vafiadis, senior director, global polyolefins and plastics, IHS Chemicals said, ‘these new feedstocks are giving North American producers an advantageous, low cost position compared to most of the global competition. Those cost advantages are providing these producers strong financial incentives to establish new facilities and to operate them at full capacity, but the implications for the market are quite disruptive, and the industry is evolving rapidly.
‘Part of the disruptive force goes back to the fact that since the cost of resin is the single largest expense for plastics producers, competing material makers are aggressively repositioning for North America’s manufacturing renaissance, while, at the same time, brand owners are re-examining both virgin materials and new composite options as sources for their production. These cost dynamics also impact other aspects of the business, such as scrap plastics recovery and recycling.’
The PE figures
According to estimates from the company, overall, North American PE demand is going to increase 20% from 2013 through 2018. Last year, the combined market for the US, Canada and Mexico totalled more than 23 million t, and forecasts show 2018 levels will reach almost 28 million t.
PP is the second largest volume plastic globally and is also benefitting from the supply of competitive natural gas feedstocks in North America. This is because it is driving up the on purpose production of propylene, the chemical building block for PP. The investments in on purpose production is primarily through propane dehydrogenation (PDH), and will serve to replace declining supply from more traditional sources, namely olefins crackers and refineries, and support not only domestic demand for polypropylene, but support increased exports of this key North American polyolefin.
The PP figures
Overall, North America PP demand will rise by 18% according to IHS between 2013 and 2018. Last year, the combined market for PP in the US, Canada and Mexico totalled 8.9 million t, and forecasts show 2018 levels will reach more than 10 million t.
Vafiadis said, ‘given the shale gas phenomenon in North America, virtually every major PE producer has announced an expansion of existing capacity. The low production cost in North America will potentially increase the competitiveness for the US producers who invest in the various projects, providing them with an advantage they did not possess in the past.’
Edited from press release by Claira Lloyd
Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/29092014/ihs-on-plastics-feedstocks/