It’s a simple fact: If product can help a plastic convertor can make their item at a lower cost with better performance, they’re going to be interested. If those same products can also help resin producers increase margins, the outlook is all the better.

On March 6^th, Sasol North America announced the construction of a 450 kilotonnes LLDPE/HDPE Swing polyethylene plant at the Lake Charles, LA site.  Sasol has chosen Univation Technologies’ UNIPOL PE process and will manufacture a broad product portfolio, including metallocene LLDPE. 

This announcement follows a string of new capacity additions announced for North America including:  1,050 KT Braskem IDESA JV at Coatzacoalcos, Mexico, 1,000 KT CPChem at Cedar Bayou, TX, 1,300 KT ExxonMobil at Baytown, TX, 450 KT Nova at Joffre, Canada, 300 KT Formosa at Point Comfort, TX and an undisclosed capacity addition for Dow at Freeport, TX.

Townsend Solutions tracks global polypropylene and polyethylene capacities and capacity announcements by resin type (PP, LDPE, HDPE, LLDPE, bi-modal HDPE, higher alpha olefins (HAO) LLDPE, metallocene LLDPE, EVA, acrylate and acid copolymers, plastomers and elastomers).   For more information please contact Frances Davidson at +1-281-873-8733 extension 120 or by email to fdavidson@townsendsolutions.com.

Rising wages in China, relaxed transportation regulations, and 44 international free trade agreements – plus trade deals and promotions with dozens of other counties – are giving Mexico a brighter outlook as a potential location for new and expanding plastic processing facilities and many major companies are noticing.

From resin producers to automotive parts manufacturers to toy makers, attention is turning away from China, with its high logistics costs and rising wages.

In the past four years, average labor costs throughout China have increased 20% and no slowdown is in sight as both domestic and international attention is focused on working conditions in Chinese factories and the welfare of factory workers.

In the same time period, labor costs in Mexico rose only 1%.

In 2005, the average manufacturing wage in China was $0.60/hour. In 2011, that number reached $1.63/hour – an increase of $1.03 per hour per employee. While wages in Mexico increased only $0.20 per hour per employee in that same time period -- from $1.90/hour in 2005 to $2.10/hour in 2011. (Note: in China there are housing and other benefits provided to workers, beyond the hourly wage.)

“With the development of shale gas in North America and the increased polyethylene and polypropylene supply that it will bring, I strongly believe we are going to see an influx of new plastics processing factories and international contracts for existing manufacturers in Mexico,” said Roberto Ribeiro, Polyolefins Consultant at Townsend Solutions in Houston.

With the rising labor costs and even minimal increases in logistics costs associated with importing products from China, many analysts say within the next three to five years it will be cheaper to manufacture products for the North American and even European markets in North America than in China.

“With labor costs rising in China and the logistical concerns associated simply with the time involved in shipping products from China to the North American market, many companies are looking at bringing production back to North American soil,” Ribeiro said.

With the lowest labor costs in North America, Mexico stands to benefit from this shift and with plans for increased polyolefins production capacity in the United States -- stemming from shale gas -- planned in the near future, plastics conversion could become a booming business south of the US border.

A 2011 US Department of Transportation rule change brought about by the 1994 North American Free Trade Agreement has also made Mexico a more attractive importer for American customers. In the past, goods crossing into the US from Mexico via truck had to be transferred at the border from a Mexican-owned and operated truck to an American-owned and operated truck.

Now, Mexican trucks can travel throughout the United States, as long as they meet US safety and emissions standards, submit to safety and compliance checks and carry US insurance. This has the potential to save time and money for importers from Mexico and opens the door for increased production south of the border.
 
There are also a number of rail lines – many already American-owned – connecting Mexico and the United States.

Already, Brazilian resin producer, Braskem, has a joint venture with the Mexican Grupo Idesa SA de CV to construct an ethylene cracker and three polymerization plants in Mexico, with a target startup date of July 2015. The plants will have the capacity to produce 1 million tonnes of polyethylene resin per year.

Resin producers aren’t the only ones looking to Mexico as their next big opportunity. Several plastic processors have already made the move or are looking for manufacturing options on North American soil.
 
American shoemaker, Equipt for Play, recently moved its manufacturing operations from China to Mexico, citing not only cost but convenience and easier oversight and quality control for the move.

Lego Inc. has a massive expansion underway at its Monterrey, Mexico plants.

Japanese auto parts manufacturer, Yachiyo, will start making plastic fuel tanks and sunroofs for Honda vehicles in its Mexico plant later this year.
 
And, German automotive parts maker, Grammer AG, recently announced it is looking to expand its North American presence with a new production facility in North America. An exact location has not yet been announced, but the company currently has customer support for the North American market headquartered at a sales office in Troy, Michigan. Headrests, armrests and center consoles are produced at Grammer’s two current plants in Mexico.
 
“It is an exciting time for Mexican plastics manufacturers,” Ribeiro said. “We have fielded several calls from companies looking for Mexican factories that might be able to produce their goods more efficiently and at a lower cost than they are currently seeing in China. Mexico is an emerging market that has started receiving a lot of international attention.”

About Townsend Solutions
With headquarters in Houston Texas, Townsend Solutions is a provider of market research and information to the global plastics industry. In addition to numerous published reports detailing consumption, capacity, trade, resin pricing and growth forecasts, Townsend also maintains the industry’s most comprehensive database of plastic processing plants world-wide. For more information about Townsend products and services contact Frances Davidson, Director of Global Sales at +1-281-873-8733 extension 120 or by email fdavidson@TownsendSolutions.com.

The ringing in of the New Year brought some hefty price hikes to many polypropylene (PP) and polyethylene (PE) resin buyers and the roller coaster appears to be on the uphill climb.

It’s looking like February PP will follow the just announced 6.0 cpp increase in PGP monomer contracts for February, just under the 7.0 – 9.0 cpp producers officially had on the table.  The higher gains appeared to be offset by weaker demand.  This will be a total increase of 21.0 cpp since the beginning of the year and 26.0 cpp since PP prices started to climb in October 2012.  The back-to-back price surge has left many processors frustrated about being able to quickly pass along the costs downstream.

PE is reacting more modestly, with increases of 4.0 cpp on the table for both February and March.  Spot pricing so far is not supporting the full February increase and March is even more unclear, especially if the price of ethylene stabilizes or goes lower.

While some processors are working off lower cost inventories, having stockpiled during December when prices were lower, those who had to buy are definitely taking the hit.  Is there any relief in sight?  Most crackers are back online after the unexpected interruptions, but the resin market will still have to deal with the supply tightness from the scheduled first quarter maintenance turnarounds.

Townsend Solutions provides an in-depth analysis and tracking of over 60 grades of  PP, PE, PET, PS & PVC resins in our monthly Plastic Market Monthly (PMM) report. For current or historical resin grade specific pricing please contact Terry Ulery at tulery@townsendsolutions.com  or 1-281-873-8733 extension 133.

A recent string of unexpected cracker outages has taken most of the blame for the price increases on several commodity resins. Polypropylene, polyethylene, polystyrene and polyvinyl chloride resin prices have risen, some dramatically, since January 1st. These outages have led to tightened feedstock supply and higher spot prices and downstream markets are suffering. The spillover effect from the outages, coupled with scheduled shutdowns for first quarter maintenance turnarounds, is expected to keep upward pressure on prices through April.
 
Increases in commodity resins varied – with PS seeing a 3-cent increase on average while PE rose by 5.0 cents and PP by a tremendous 15.0 cents. The PVC market was on average flat for January, but many PVC resin buyers saw increases between 1.0 and 2.0 cents.

Besides the unexpected disruption to polymer feedstock supply, other contributing factors to the price increases were the high cost of monomers; export opportunities coinciding with the Chinese New Year, low inventories of suppliers and increased cost of Asian PE prices.

Townsend Solutions provides an in-depth analysis and tracking of over 60 grades of PE, PET, PP, PS & PVC resins in our monthly Plastic Market Monthly (PMM) report. For current or historical resin grade specific pricing please contact Terry Ulery at tulery@townsendsolutions.com  or 1-281-873-8733 extension 133.

According to a recent news release, Mitsui Chemicals and Prime Polymer Co. have just announced a 14,000-ton augmentation of polypropylene production in the United States. This increased augmentation, combined with previously announced increases, brings production capacity to near 268,000 tons.

The Mitsui Chemicals Group is a leader in supplying polypropylene to automobile makers worldwide. It’s production facilities are in 8 key world markets, including Japan, Mexico, the U.S., Brazil, Thailand, China, Europe and India.

With the recent economic downturn, automakers suffered a loss in production output and sales. Now, as the economy slowly begins to recover, American car manufacturers are beginning to see a return to normalcy. January was a big year for recovery for the big three automakers, with Ford, General Motors and Chrysler all reported their best sales month in at least five years. All signs point to 2013 being a record setting year for automobile makers.

As the market continues to improve, the Group sees this as a great strategic opportunity to expand their position and increase support for their global supply network.

Townsend has recent data on US polypropylene markets.  For more information contact Frances Davidson at 1-281-873-8733 Extension 120 or by email fdavidson@townsendsolutions.com.

Since 2006, global consumption of C6/C8 LLDPEs (HAO) and metallocene resin has grown at an AAGR of more than 6.5%. Driving this growth is the ever increasing demand in developing markets like Central/South America, India, Middle East, China and other Asia/Pacific countries.

It’s no surprise that growth in HAO LLDPE and mLLDPE demand in the developing regions of the world is significantly outpacing growth in more developed areas. The demand for HAO LLDPE and mLLDPE in these countries has actually doubled from 15% of global demand in 2006 to 32% in 2011, according to newly published research by Townsend Solutions.

Significant downstream investment in production capabilities, supply, and improved processing equipment are driving the growth, according to Townsend experts. Much of this can be attributed to the development of newer applications not previously popular in these areas, such as heavy-duty shipping bags, higher quality shrink and stretch wrap, agricultural film and non-film applications like insulation and jacketing in wire and cable, geo-membranes, rotomolded tanks, and synthetic turf.

Global demand for HAO LLDPE & mLLDPE now represents roughly 29% of overall LLDPE demand. North America and Western Europe combined account for more than 50% of the global consumption of these specialty resins.

The newly published Townsend Specialty Polyethylene HAO & mLLDPE Worldwide report provides unparalleled detail on resin demand at the application level with a 5-year outlook, supplier capacities by production line with announced additions over the next five years, producer profiles, regional trade balances, price indexes by region, with in-depth discussion of growth trends and industry activity. For more information call Frances Davidson at +1-281-873-8733 Extension 120 or email fdavidson@townsendsolutions.com .

Egypt recently announced its decision to lift anti-dumping fees on polypropylene imports from Saudi Arabia. With Saudi imports being sold at a reduced price compared to their Egyptian counterparts, some Egyptian PP producers claimed that they were “dumping” – a term used to typically describe exported goods that are sold far below market value or in quantities that cannot be explained through market competition.

Since before April 2012, the Egyptian government levied fees against Saudi PP imports. Some of the world’s largest petrochemical companies were affected, including National Industrialization Co., Saudi Basic Industries Corp. (SABIC), and Rabigh Refining and Petrochemical Co.

Following a lengthy study into the effects of the Saudi imports were having on Egyptian markets, the Egyptian government concluded that Saudi imports were not damaging Egyptian PP markets and that keeping the fees in place would be against the interest of the Egyptian public.

According to Townsends Solutions 2012 Global PP Report (consumption, capacity & trade), Egypt has the third highest PP consumption in the African Continent and is expected to see consumption growth of over 6% by 2016. Saudi Arabia is second in the Middle East and is projected to have PP consumption growth of over 5% by 2016.

Plastic products have proven very reliable, economical, and important within various industries.  The food, beverage, medical, and automotive industries now use plastic over glass, metal, and other materials.  BOPP Film is a bi-axially oriented polypropylene (BOPP) that has good clarity, resistance to UV light, a smooth surface, and excellent chemical and abrasion resistance.  This clear material also has great acid resistance and reasonable scuff resistance.  These excellent qualities have led to the significant boom of the BOPP film industry over the past 20-30 years.

Changing consumer dynamics and patterns in the packaging market is leading to an increased preference for plastic film compared to other flexible packaging materials such as Kraft paper and aluminum foil.  The industry’s adoption of BOPP as a sophisticated and strong alternative has revolutionized the food-packaging industry.

BOPP films represent one of the highest growth segments in the global plastics film industry.  Recently, BOPP production capacity is estimated to expand by two to three million tons, with the Middle East accounting for the bulk of capacity expansion.  Growth in the BOPP film market is being driven by rising demand from Asia (particularly China and India) and other developing regions such as Latin America and Eastern Europe.

Even the slower growing North American BOPP market has seen significant changes in the past few years.    Major advancements in process capabilities – coupled with enhanced resins and improved equipment – has led to a rampant demand for BOPP over the last few years that has included several foreign investments. With the recent Oct. 29, 2012 purchase of ExxonMobil BOPP film business unit by Jindel Poly Films (India) and the South American BOPP and CPP film manufacturer, OPP Film, and SA (a subsidiary of Oben Holding Group) establishing a distribution and technical support chain within the United States to serve demand – exemplifies the growth of BOPP in North America.

Consumption, capacity and trade for global BOPP markets are covered in detail in Townsend’s Annual PP Report. For subscription information and a free sample report, contact Frances Davidson at +1-281-873-8733 (Ext. 120) or email fdavidson@townsendsolutions.com.

Ethyl Vinyl Acetate has long been regarded in the industry as a polymer that wears many masks.  In each of its different forms, EVA finds itself as one of the favorite options for different industry leaders.  From shoes to solar panels and hot glue sticks, EVA can be used in many different applications because of its excellent clarity and adhesiveness.  Still, a long overlooked competitor is taking small percentage shares of the EVA manufacturers’ market – whether or not this is a threat, depends on who you ask.

Metallocene LLDPE resin shares similar properties of VLEVA (very low ethyl vinyl acetate) resin and is often regarded as a viable alternative to lower additive forms of EVA. Because of its historically lower price, metallocene has slowly been taking away market share of EVA. Some EVA manufacturers are fine with this, conceding the loss because of the small markets that metallocene typically takes.  It may not feel like metallocene is doing much harm to EVA, but the small percentages may add up to a significant volume of EVA lost globally. In 2011, 3.4 million tonnes of EVA was consumed globally, according to Townsend’s study.

Regardless, EVA is still a dominate polymer and will continue to be so until a superior contender comes along.  Meanwhile, metallocene has found its own comfortable niche, slowly and quietly creating its own market share.

Townsend Solutions offers a monthly, comprehensive look into EVA, its market pricing, competitiveness to other materials, and capacity changes around the world. For more information on Townsend Solution’s EVA Global Market Intelligence Monthly, please contact Frances Davidson at 281-873-8733 (ext. 120) or email her at fdavidson@townsendsolutions.com.

While polypropylene is expected to see some growth in coming years, economic uncertainty continues to reign in Europe where resin suppliers wrestle daily with the challenges of maintaining a viable balance between cost, quality and service.

There are some encouraging trends.  Polypropylene, because of its lack of BPA is becoming a popular choice for manufacturers of water bottles.  Recently, France banned polycarbonate use in food packaging – forcing a switch to PP.  Combine all of this with packaging companies’ desire to switch from glass and metal to entirely plastic, and there are positive signs PP consumption in Europe will eventually see positive gains in upcoming years.

In the meantime, understanding shifts in market needs and competitive benchmarking remain crucial elements in strategic planning and business management.  

To obtain these critical, unbiased and constructive customer feedbacks, European polypropylene producers are sponsoring a market-wide customer satisfaction and loyalty survey of polypropylene buyers.  This program, conducted by Townsend Solutions, will cover all major European regions, key buyers and markets.

During this survey, more than 2500 key PP buyers will be invited to discuss key issues affecting their businesses and provide constructive feedback on their suppliers’ performance on specific elements -- including delivery, product quality, customer service, pricing and terms.  Participating PP suppliers will each receive numerous business specific competitive benchmarks at major regional and market levels.  Benchmarks will reference detailed customer feedback on expectations and unmet needs.

To participate, PP Producers should contact Sue Thackeray at +1-281-873-8733 (Ext. 157) or email her at sthackeray@townsendsolutions.com.

Within the last few years, the global environmental market has seen tremendous growth in the face of fluctuating international markets.  Solar panels, recycling processes, and other steps have helped the green movement flourish worldwide.  According to an Environmental Business Journal study, the $866 billion global environmental market has seen a 4% growth in 2011 and is expected to increase steadily over the coming years.

Fortunately, there is a role for the plastics industry in this staggering growth.  Ethyl Vinyl Acetate, or EVA, is a polymer commonly used in solar panels.  When processed, the extremely sticky adhesive is used primarily as an encapsulant film and sheet sealant application.  The film allows light to penetrate the panels while providing protection from the elements. Without EVA, solar panels would experience a discoloring over time and lack essential protection from nature.

Townsend Solutions predicts a growth rate of 3.5% a year until 2016 for EVA resin consumption. Manufactures in regions such as the Middle East and Central and Eastern Europe are predicted to see dramatic export and growth in EVA. This growth, combined with global environmental market trends and other uses of EVA, will provide a bright future for producers in the years to come.

Townsend Solutions offers a comprehensive look into the use of EVA, by application and VA level, for 11 regions around the globe.  For more information on Townsend Solution’s EVA Global Market Study, please contact Frances Davidson at 281-873-8733 (ext. 120) or email her at fdavidson@townsendsolutions.com.

As the United States slowly recovers from the 2008 recession, Europe continues to fight its own bleak economic outlook.  With a recession still ongoing, shouldn’t businesses be bad across the board in Europe?

Luckily, the European automobile industry has seen a sharp increase in exports – primarily to China and the U.S.A.  Although not reaching its peak of 17 million in 2000, European car manufacturers were still able to produce 14.4 million vehicles in 2011.  This steady increase was due in part to exports being up 10% in 2011, which helped balance out the drop in local demand.

With the ongoing recession, consumers are demanding automobiles with better gas mileage.  This shift has led to resins made from polypropylene becoming more and more common in automobiles.  Their light weight, heat resistance, and affordability are an easy choice for various car parts - giving the plastics industry in Europe a decided advantage.

Some parts being made with PP compounds are:

Some countries’ statistics weren’t all positive.  France’s production increased 3% but sales were down -2.1%, and Spain’s production declined -1.4%. Domestic sales also continue to decline in Europe with manufacturers depending on increasing export sales.

Nevertheless, as long as European automobile exports continue their current trend, the plastic industry in Europe will continue to see steady growth.

To provide a more comprehensive view of the European plastics industry, Townsend Solutions recently published market studies on PP Compounds, Specialty PPs, Polypropylene, Plastic Additives, PE, Specialty PEs and more. For more information, please email Frances Davidson at fdavidson@townsendsolutions.com or call +1-281-873-8733 x120 for more information.

The changing landscape of nations following the political turmoil of 2011’s Arab Spring has had an effect on the polypropylene consumption in Africa.  Egypt, with an advanced plastics industry, saw its PP consumption slow in the wake of its political uprising.  Once a major exporter of PP products to European nations, Egypt now finds it slow to recover as it faces competition from China and India in familiar markets. Its political upheaval affects not only the short-term but also the long-term as foreign investors are slow to re-enter the market.

Although Townsend Solutions current analysis puts Egypt PP consumption in a bad state, that doesn’t mean there isn’t any hope of turning things around.  Tunisia, a country that went through political turmoil around the same time Egypt did, is now experiencing large growth in the plastic industry and increased foreign investment.  Currently, Tunisia has approximately 500 plastics companies employing 11,000 people.   Sixty-three of these companies are financed directly from foreign investments.

Overall, PP compound consumption in Africa is expected to grow steadily. In 2011, Africa’s overall PP compound consumption was 97 kilotonnes, but by 2016 Townsend solutions projects an increase to 136 kt with a 7.1% average annual growth rate.  These data published in Townsend’s PP Compounding Global Market Study today.

Email Frances Davidson at fdavidson@townsendsolutions.com or call +1-281-873-8733 x120 for more information.

The latest edition of Townsend's Plastic Market Monthly reported that PVC resin buyers paid more for their resin in September as suppliers implemented their announced price increases.  The volume-weighted average for all PVC resin grades rose 2.2 cents-per-pound (cpp) to 44.0 cpp.  The PVC resin grade experiencing the largest increase in September was General Purpose, up 4.2 cpp.  Pipe and Siding resin prices both rose 2.1 cpp, while Flexible Film and Wire and Cable resin prices rose 0.3 and 1.3 cpp, respectively.

Improving demand and a tightening supply are giving producers encouragement to try to push through a set of new price initiatives for the third quarter.  Most are looking for increases of between 3.0 and 5.0 cpp.  Their reasoning is the recent rising cost of ethylene and improved demand, especially in the export market.  Restated nominations are on the table for an increase of 3.0 cpp for October shipments.

Recent government statistics showing improved new home construction are also lending support to these initiatives as well as a constricted supply due to planned outages.

Townsend’s PMM benchmarks monthly transactional resin prices for PS, PVC, PP Copolymer, PP Homopolymer, PET, LLDPE, LDPE, HDPE Molding and HDPE Extrusion in the US and Canada. To participate in the benchmark or obtain subscription information please contact Terry Ulery at +1-281-873-8733 Extention 133 or email tulery@townsendsolutions.com.

This week, the Brazilian government raised its import duties for polyethylene and PMMA from 14% to 20%.  With this new duty, it's expected that the total cost to import PE resin will be 40% higher than the FOB price.  The total cost is defined as FOB price + import duty + fees + taxes.

Polycarbonate optical resin grades were also increased from 14% to 20%, yet other PC resin grades remain at a 14% import duty.

PVC import duties increased from 2% to 14%.

It is important to note that the duty hike did NOT affect polypropylene (PP) or Ethyl Vinyl Acetate (EVA) resins.

In 2011, the global plastic additives industry grew to nearly 13 million tonnes and was valued at $38 billion.  Emerging markets of China, Central and South America, India, and ROW (MEAF, Eastern Europe) are having a huge impact on this dynamic industry with exploding demand growth for plastics consumption and exports resulting in these markets accounting for 46% of worldwide additives volume, up from 39% in 2007. 

“By 2016, it is expected that emerging markets will exceed the developed regions in total plastics additives usage”, states Dr. Peter Calais, Plastics Additives Expert at Townsend Solutions.  “The average annual growth rates (AAGR) for the emerging markets will grow at an average rate of 6.3% while the developed regions at an average rate of 1.9%.”

China surpassed all other reporting regions in 2007 and now holds a 33% share of the global additives consumption in 2011. In additives products for plastics, it is not surprising that plasticizers (predominately used in PVC) remain the largest product category and accounts for 53% of total global volume; however, plasticizers grew at one of the lowest rates (0.9% AAGR) due to the slow economic recovery and depressed housing / construction markets in the developed regions.  It is notable that the use of slip agents and antistats grew at the fastest rates worldwide for all additives - 5.3% and 4.2%, respectively. The high growth of plastic film, primarily used in consumer packaging, and the desire to improve the processability, clarity, and down-gauging has resulted in the higher consumption of these processing additives.

Townsend’s latest market study, Plastics Additives 8, provides a detailed analysis of 15 different plastic additive groupings including Antiblocking Agents, Antioxidants, Antistatic Agents, Biocides, Chemical Blowing Agents, Coupling Agents, Flame Retardants, Heat Stabilizers, Impact Modifiers & Processing Aids, Light Stabilizers, Lubricants/Internal Mold Release Agents, Nucleating/Clarifying Agents, Organic Peroxides, Plasticizers and Slip Agents.  The report details 2011 consumption by supplier, by product, by product type, and by region, as well as a projection for 2016, trends & drivers, applications, recent developments and producer activity.  Email Frances Davidson at fdavidson@townsendsolutions.com or call +1-281-873-8733 for more information.

Townsend's Plastic Market Monthly recently reported that the vast majority of PVC resin buyers paid less for their resin in June with the volume-weighted average for PVC resin grades dropping an average of 4.6 cents-per-pound (cpp).  General purpose and Pipe grades both experienced the highest decreases, upwards of 5.0 cpp.

Lower energy and feedstock costs continued to put downward pressure on the PVC resin market in June.  Feedstock prices are still headed down, but stronger demand for PVC in the warm summer months may boost demand and lend some stability to PVC resin prices.  A 5.0 cpp increase is still on the table for July from one supplier, but industry watchers remain skeptical this will hold any weight.  Some are expecting to see PVC resin prices fall again in July, although at a much slower rate.  Exports continue to drive the market.

Townsend’s PMM benchmarks monthly transactional resin prices for PS, PVC, PP Copolymer, PP Homopolymer, PET, LLDPE, LDPE, HDPE Molding and HDPE Extrusion in the US and Canada. To participate in the benchmark or obtain subscription information please contact Terry Ulery at +1-281-873-8733 Extention 133 or email tulery@townsendsolutions.com.

As published in Townsend's Plastic Market Monthly, A mix of lower and fluctuating feedstock costs took the bite out of the price increases polystyrene suppliers sought for May. Butadiene is continuing downward and the June benzene contract has already settled back down 10 cent/gallon from May. Demand appears to be improving somewhat. However, the volatility in the benzene prices have some market watchers questioning the extent of the decreases most buyers are expecting for June.

Townsend’s Plastic Market Monthly benchmarks monthly transactional resin prices for PS, PVC, PP Copolymer, PP Homopolymer, PET, LLDPE, LDPE, HDPE Molding and HDPE Extrusion in the US and Canada. To participate in the benchmark or obtain subscription information please contact Terry Ulery at +1-281-873-8733 Extention 133 or email tulery@townsendsolutions.com.

Production of goods, particularly those made using plastic resins, are the overriding factor affecting demand for antioxidants, since virtually all resins use some antioxidant.  Key industry sectors include automotive, appliances, construction, and packaging, among others.  During 2008-2009, all of these sectors were affected by the worldwide recession, in some regions more than others.  Declines of 20-25% or more were realized in the developed regions of North America, Europe, and Japan, while growth was limited to single digits in key developing regions of China and India.  In 2010-2011, plastics growth rebounded globally, but volumes of plastics in North America are just beginning to return to pre-recession levels with Europe lagging a little further behind. 

Prices for the “big three” commodity antioxidants are continuing to decline due to the aggressive marketing of Asian suppliers.  For example, pricing for commodity antioxidants in AP declined 10-20% from 2007-2009, although prices were more resilient in Japan because of the high proportion of specialties and supply issues with yellow phosphates. Prices are also  pressured by new AO capacity which has increased ahead of demand. 

 

Antioxidants are probably the most universal additives for plastics since they are essentially used in about 90% of the total plastic volume. An antioxidant’s primary function is to protect the polymer during processing or in the end-use application.  North America consumed about 80,000 tonnes of antioxidants for plastics, worth about $460 million, in 2011.
 

Townsend’s latest market study; Plastics Additives 8 provides a detailed analysis of 15 different plastic additive groupings including Antiblocking Agents, Antioxidants, Antistatic Agents, Biocides, Chemical Blowing Agents, Coupling Agents, Flame Retardants, Heat Stabilizers, Impact Modifiers & Processing Aids, Light Stabilizers, Lubricants/Internal Mold Release Agents, Nucleating/Clarifying Agents, Organic Peroxides, Plasticizers and Slip Agents.  The report details 2011 consumption by supplier, by product, by product type, and by region, as well as a projection for 2016, trends & drivers, applications, recent developments and producer activity. 

For more information contact Frances Davidson by email at fdavidson@townsendsolutions.com or phone 1-281-873-8733 Extension 120.

Flame retardants play an increasingly important role in today’s world protecting lives and allowing for plastic parts to be used in ever more diverse applications. The transportation, construction, appliance and electronics industries use flame retardants to prevent human injury or death and to protect property from fire damage. Fundamentally, flame retardants reduce the ease of ignition, amount of smoke generation, and rate of burn of plastics. The use has grown substantially in the past 4 years, notably in electronics, and will continue to grow at a global annualized rate of 4-5%. Use in plastics accounts for approximately 85% of all flame retardants used with textiles and rubber products accounting for most of the rest.

Flame retardants can be organic or inorganic in composition. They can be additive types which are either melt blendable with polymers or are held in a dispersed phase, or they can be reactive flame retardants which bind into polymer molecules. They most common contain bromine, chlorine, phosphorus, antimony, or hydrated inorganic salts. Flame retardants are used at loading levels from a few percent to more than 60% of the formulation. The use of flame retardants is almost always to meet a defined standard test that has been designed to mimic a particular fire risk. The choice of flame retardant is usually a trade-off involving cost and final polymer properties.

In addition to cost and performance demands, the plastics market for flame retardants is driven by a number of competing forces ranging from fire standard legislation and toxicity regulations to price situations, performance, and other market factors. These combined factors have resulted in recent significant shifts in demand for the major types of flame retardants.

The FR sector has continued to change rapidly.  A host of new products -- both halogen-free and high molecular-weight polymeric flame retardants -- have been introduced in the last few years to meet the desire for halogen-free FRs with improved performance and to replace decabrom flame retardants as they are phased out.

North America consumed the largest volume of flame retardants in 2011 with a 28% share.

Townsend’s latest market study; Plastics Additives 8 provides a detailed analysis of 15 different plastic additive groupings including Antiblocking Agents, Antioxidants, Antistatic Agents, Biocides, Chemical Blowing Agents, Coupling Agents, Flame Retardants, Heat Stabilizers, Impact Modifiers & Processing Aids, Light Stabilizers, Lubricants/Internal Mold Release Agents, Nucleating/Clarifying Agents, Organic Peroxides, Plasticizers and Slip Agents.  The report details 2011 consumption by supplier, by product, by product type, and by region, as well as a projection for 2016, trends & drivers, applications, recent developments and producer activity.  For more information contact Frances Davidson by email at fdavidson@townsendsolutions.com or phone 1-281-873-8733 Extension 120.

According to Townsend's Plastic Market Monthly Report, PP Copolymer resin prices increased slightly in April from March levels for most grades.  The PMM's volume-weighted average for all PP Copolymer resin grades increased only 0.6 cents-per-pound (cpp) to 97.3 cpp.  The largest increases, 1.2 and 1.1 cpp respectively, were felt by buyers of Injection Molding, Low-Med Impact and Injection Molding-Random resin grades.

Suppliers had sought as much as a 5.0 cpp increase for April, but nearly all of that was held off after the rollover in the April propylene contract.  Propylene has already settled down 10.0 cpp for May, and this may very well support a drop in propylene resin prices for the month, with some market participants predicting further price erosion for June.

PP Copolymer resin buyers reporting to the PMM are forecasting the volume-weighted average for all grades to decrease by 9.0 cpp in May.

Townsend’s PMM benchmarks monthly transactional resin prices for PS, PVC, PP Copolymer, PP Homopolymer, PET, LLDPE, LDPE, HDPE Molding and HDPE Extrusion in the US and Canada. To participate in the benchmark or obtain subscription information please contact Terry Ulery at +1-281-873-8733 Extention 133 or email tulery@townsendsolutions.com.

Polyethylene terephthalate (PET) and polystyrene, both big players in the packaging industry, may have some competition as more companies look for sustainability options for their packaging needs.  Bio-based PLA, PHA, PBT and PEF are beginning to look like more viable option, which could spell trouble for the legacy plastics.

Polylactic acid (PLA), polyhydroxyalkanoate (PHA), polybutylene terephthalate (PBT) and polyethylene furanoate (PEF) are examples of polymers now being developed from bio-renewable resources.  PLA is positioned to compete with PET in thermoforming applications, but not in bottle application due to poor barrier properties. However, PEF - with its better heat and barrier properties - has the potential to replace PET.  PHA appears to be useful in several other industry segments including agriculture, medical and single-use food service where degradation is valued in packaging.

The largest producers of bio-based polymers include US-based NatureWorks and the Dutch companies PURAC and Avantium.  Major brand owners currently using bio-based packaging include, PepsiCo, Coca-Cola, Stoneyfield Farms and France’s Danone.  Some industry insiders expect demand for bio-based, biodegradable plastics will more than triple by 2015. 

According to Townsend’s Plastic Market Monthly Report, HDPE resin prices rose again in March for the fourth consecutive month as most suppliers pushed through the remainder of the 6.0 cents-per-pound (cpp) price increase they sought in February.  The PMM’s volume-weighted-average for HDPE Extrusion resin grades rose 2.9 cpp, while HDPE Molding resin grades increased by an average of 2.4 cpp.  The increases were mostly due to a tightened supply resulting from the heavy spring turnaround season and several unexpected cracker outages.

Most HDPE resin buyers reporting to the PMM do not expect their HDPE resin prices to increase in April.  This seems supported as it has just been announced that the price increase suppliers sought for April has been pushed and likely won’t be passed on to buyers until May and June.  Market sources continue to speculate on the possibility of lower prices over the next few months if the turnaround season ends in May without complications.

The American Chemical Council reported Domestic HDPE resin production increased by a healthy 12.80 percent in February compared to the same month in 2011.  Resin sales to Pipe and Conduit extruders increased significantly by 19.52 percent in February compared to the same time last year, with extruders of Non-Corrugated/Gas Distribution pipe showing a dramatic increase of 65.05 percent when compared to February 2011.

Townsend’s PMM benchmarks monthly transactional resin prices for PS, PVC, PP Copolymer, PP Homopolymer, PET, LLDPE, LDPE, HDPE Molding and HDPE Extrusion in the US and Canada.  To participate in the benchmark or obtain subscription information please contact Terry Ulery at +1-281-873-8733 Extention 133 or email tulery@townsendsolutions.com.

The recent announcement by Shell to locate its new $2 billion ethane cracker plant in Beaver County, Pennsylvania has most reacting with well-placed enthusiasm at what it will mean for the economy in the region as well as the effects it will have on the downstream plastics industry.  The location is strategically close to the shale gas abundant tri-state region bordering Ohio and Pennsylvania and is only 35 miles from Pittsburg, the city that is quickly laying claim as the capital of shale gas drilling in the Appalachian region.

The American Chemistry Council has estimated that more than 10,000 new permanent jobs in the chemical and supplier industries could result from a cracker located in the region.  Shell estimates an additional 10,000 temporary construction jobs would also be created.   Some estimates claim as much as $15 to $20 billion of new economic incentives could result.

The decision to actually build the plant is still a couple of years away as a land option agreement has just been signed with Horsehead Corporation, who must relocate their zinc production facility currently operating at the preferred site.   Time well spent as Shell continues with an environmental analysis of the site, further design studies, and continued study of the economic feasibility of the project.

Townsend Solutions will be following the project closely as it will undoubtedly have a tremendous effect on the plastics industry.  As a leading global provider of business intelligence for the petrochemical and plastics industry, Townsend is in a unique position to study the downstream economic impact of the shale gas boom and has launched a collaborative market study entitled “The Effects of Shale Gas on the North American Converting Industry.”  The study is slated for publication during the 3rd quarter of 2012.  For more information please contact Frances Davidson at +1-281-873-8733 Extension 120 or email fdavidson@townsendsolutions.com .  Visit our customer portal to download recent industry presentations, technical papers and brochures - http://customer.townsendsolutions.com/

Recent announcements by Shell, Chevron Phillips, Dow and NOVA make it very clear that the polyolefins market in North America will change drastically over the next decade.

The suppliers are banking that the feedstock cost advantage of ethylene from shale-gas-derived ethane will be sustainable and will be the future of the industry, but there are still a lot of questions about what exactly all this means for converters of polyethylene.

Townsend Solutions has a team of research experts dedicated to looking at the impact shale gas will have on the polyethylene industry as they put together Townsend Solutions’ North American Collaborative Market Study: The Effects of Shale Gas on the North American Converting Industry. Some of the research team’s early findings are quite interesting.

The primary effects of the new supply will be felt in the area surrounding the Marcellus shale gas reserve – which will include the Northeastern, Mid-Atlantic and Midwest United States. While there is already a heavy concentration of converters in those areas, the increased PE supply is sure to attract more, and Townsend’s researchers are digging in to discover exactly what that increased competition will mean in terms of everything from PE prices to logistics issues and availability of equipment. Also, beyond the regional impacts, researchers are investigating the potential for inter-material competition, import-export changes and much more.
 
“The recent shale gas discoveries have cast a lot of uncertainty on the North American and global PE markets, and there is great potential for the downstream market,” said David Anderson, Business Director – Global Polyolefin Consulting at Townsend. “We are excited about this study and exploring the implications of potentially less expensive ethylene monomer on the supply of PE polymers and how this will impact plastic converting business growth and the shifting business dynamics surrounding where plastic goods are produced.”

For more information about Townsend Solutions’ North American Collaborative Market Study: The Effects of Shale Gas on the North American Converting Industry, contact Frances Davidson at +1 281 873 8733 or email  fdavidson@townsendsolutions.com.

According to the January edition of Townsend’s Monthly Global EVA Market Intelligence report, US and China have seen positive growth in EVA consumption for 2011.  But, since the peak in July there has been a drop in EVA resin purchasing in other regions of the world, specifically Other Asia Pacific and Central South America.   There was a marked decline in buying interest among customers in the Other Asia Pacific region as customers reviewed their inventories and projections for year end. China is over capacity on encapsulation sheet grades and Townsend market experts are predicting a depletion of stock.  For the most part, prices have declined for all types of EVA in the last half of 2011.   Western Europe has seen a recent decline in the photovoltaics segment but with orders in other markets making up the difference, the demand for EVA has been normal.

Earlier this month PlasticMarketData reported on planned capacity announcements in Asia, including an announcement for a 2013 expansion at Tosoh’s EVA production line at the Nanyo, Yamaguchi Japan plant.  According to a recent statement by Tosoh “they currently have no announced plan for this expansion and the project is currently on hold."  We stand corrected, and apologize for the oversight.

For the latest on global EVA demand, capacity and pricing contact Frances Davidson at +1-281-873-8733 Extension 120 or email fdavidson@townsendsolutions.com.

First in a series of planned Market Intelligence Reports, Townsend’s EVA Global Market Monthly reports on EVA pricing & capacity changes around the world. Covering six key regional and global markets for EVA resin, the monthly intelligence reports cover current market activities, trends & drivers and transactional resin pricing (by %VA content range).

“This report fills a significant gap in EVA market intelligence” states David Anderson, Director of Consulting for Houston based market research firm Townsend Solutions. "Townsend is set to report on monthly pricing, trends and issues affecting growth in EVA markets around the world so our clients can be fully informed by the end of the first week of every month.  This real time reporting is key for EVA buyers, petrochemical producers and other suppliers to the global EVA supply chain."

The EVA market was expected to see "robust" growth of upwards of 10% globally in 2011. This has been stalled by a variety of factors including unexpected slowdowns in key growth areas like solar cell applications. Stay informed with monthly updates! For subscription information and a free sample report contact Frances Davidson at +1-281-873-8733 Extension 120 or email fdavidson@townsendsolutions.com. 

Beginning in February, more than 3,500 European Polyethylene processors will have the opportunity to provide extensive feedback to their resin suppliers regarding product and service offerings via the global market research firm, Townsend Solutions. 

CLASS PE Europe is sponsored every two years by major resin suppliers serving the European plastic processing marketplace. Rich in historical data, this program has evolved over the years to become the industry standard for measuring customer satisfaction in the plastics processing marketplace. Variables impacting survey design and demographic coverage are collaboratively designed by steering committee comprised of representatives from both Townsend and subscribers to the program. This meeting will be held in Frankfurt Germany in early January 2012.

For information on participating, or to launch a CLASS customer satisfaction program for your business contact bmitchell@townsendsolutions.com or call +1-281-873-8733.

According to Townsend's Plastic Market Monthly Report, bucking previous industry predictions of
continuing rising costs, PET resin prices headed downward again after only a slight upturn in September. This is mostly due to lower feedstock costs and lower demand. All indications are that prices will continue to decline for the short term. The PMM’s volume-weighted-average for PET in October decreased 2.9 cents-per-pound, C-PET saw a 3.6 cpp decrease while all other grades, Bottle, A-PET and Wide-Spec, experienced decreases ranging from 2.5 to 2.7 cpp.

Recent increases in PET recycling may have an impact on the virgin resin market in due time. After staying flat for two years, the volume of PET bottles recycled in the U.S. in-creased in 2010, pushing the recycling rate close to 30 percent for the first time since 1996. PET recycling also got a boost from higher sales in the bottle market.

Market sources report Coca-Cola is still trying to sell its PET recycling plant in Spartanburg, S. C., which is currently operating on a limited basis. The plant is a joint venture with United Resource Recovery Corp. Houston-based M&G is scheduled to open a plant in Corpus Christi, Texas sometime in 2014. This plant will have more than 2 billion pounds of annual PET capacity. This venture will make M&G the region’s largest producer of PET.

According to Townsend's Plastic Market Monthly Report, LLDPE resin prices experienced a significant price drop in October. A decrease in ethylene contract prices for the month, plus a wildly fluctuating spot market, coupled with lower demand gave LLDPE resin buyers some welcome relief in October.  The volume-weighted average for all LLDPE resin grades dropped 2.8 cents-per-pound (cpp) in October.  Resin deliveries were virtually unchanged in October compared to September levels, and converters maintained their inventory levels at ten days of supply.

The global heat stabilizer market is expected to have increased growth through 2015.   Heat stabilizers fall into three main categories: Mixed metals (BaZn, CaZn, CdZn), Tin based, and Lead based. Lead based stabilizers were the highest volume in 2007, but due to toxicity and environmental concerns, they are on the decline being replaced by the other types. New developments include safer organic and rare earth stabilizers, but market penetration is slow due to higher cost. In Europe, heat stabilizers have moved from Barium Zinc to Calcium Zinc (BaZn to CaZn). Industry players expect the same transition in North America and other regions of the world.

Per Townsend Solutions, a global consulting firm, heat stabilizers are used to prevent the thermal degradation of certain polymers during periods of exposure to elevated temperatures. The main application for heat stabilizers is to stabilize polyvinylchloride (PVC), derivatives of PVC and blends.

Virtually all rigid and flexible PVC utilizes some type of heat stabilizer, especially extruded PVC to prevent degradation during processing. Extruded PVC is used in Wire and Cable, Film and Sheet, Pipe, Window Frames, and Fencing. Therefore, heat stabilizers are very dependent on the strength of the PVC market.

From the list above, one can see that the extrusion PVC market is closely tied to the residential housing and commercial building market. If we look at the global PVC market in the developed regions like North America and Western Europe where the housing and construction markets have been depressed since the global financial crisis, PVC consumption has been on a steady decline. For example in the US and Canada, the extrusion PVC sales were down nearly 38% from the highs in 2006. Through July 2011 sales of PVC resin for extrusion applications in the US and Canada was 4 billion pounds versus 2006 levels where January to July sales were 7.2 billion pounds.

However, in the developing regions like China, India, and the Middle East, the housing and construction markets continue to grow. China became the largest market for heat stabilizers in 2007, surpassing both North America and Western Europe combined. The region has experienced double digit volume growth for more than a decade.

Townsend publishes a Global Plastics Additives report every three years. The most recent study provides an assessment of 2011 demand and supply, with an outlook to 2016. For more information about Townsend’s market study of Heat Stabilizers, Antiblocking Agents, Antioxidants, Antistatic Agents, Biocides, Chemical Blowing Agents, Coupling Agents, Flame Retardants, Impact Modifiers and PVC Processing Aids, Light Stabilizers, Lubricants/Mold Release Agents, Nucleating/Clarifiying Agents, Organic Peroxides, Plasticizers, Slip Agents, and Additive Producers, please contact Frances at fdavidson@TownsendSolutions.com. 

From new drainage systems for golf courses to the rebuilding of North America’s infrastructure, PE pipe & conduit is experiencing resurgence in growth similar to what was seen in pre-economic crisis times.  In the 2011 Townsend Polyethylene Report, we reported a nearly 21% jump from 2009 – 2010 in PE consumption for the pipe & conduit market for all PE resin types.  About 90% of the market uses HDPE in pipe & conduit applications.  While many other PE markets have retracted somewhat from the remarkable 2010 rebound, during the first half of 2011, HDPE for pipe & conduit is showing continued high growth of over 16% compared to first half of 2010.   The highest growth is in the non-corrugated applications including potable water, gas distribution, industrial/sewage, and conduit.

In the 2002 – 2007 time-frame, HDPE for pipe & conduit applications grew at an average annual growth rate (AAGR) of 8% / year.  Then the economic slow-down of 2008 and 2009 took a huge toll on the HDPE pipe market, falling nearly 30% from 2006.  Now, if the first half of 2011 demand continues at the current pace, 2011 HDPE demand will approach the peaks seen in the 2006 – 2007 period.  Driven by a ever increasing demand for the replacement of decaying utility piping infrastructure and the growing acceptance of HDPE, the market opportunities for HDPE pipe are numerous and sizable.
 

According to the Townsend Plastic Buyers Database, there are about 225 PE pipe manufacturing sites in all of North America.  The major producers of HDPE pipe have changed considerably in the last 10 years due to mergers, acquisitions and divestitures.  Of note:  Advanced Drainage Systems purchased Hancor making it the largest HDPE pipe producer, the Rinker Group divested the plastic pipe and liner operations creating “Polypipe”, Arnco and Dura-Line merged to create A-D Technologies, and USPoly Company, J-M Manufacturing and PW Eagle combined to form JM Eagle.  The Top 5 producers ADS / Hancor, Performance Pipe, JM Eagle, PolyPipe Inc., and A-D Technologies account for 55% of the HDPE pipe market.

Of the suppliers of HDPE resin for pipe, Chevron Phillips has the largest market share, followed by INEOS and Dow Chemical.

Over the last 10 years, we have seen the market shares of ExxonMobil, LyondellBasell and resin sold through distribution grow while Chevron Phillips’ share is lower and the remaining producers have mostly maintained their market shares.


On a global basis, Townsend forecasts the pipe market to have the highest growth of all the major processes through 2015.  This is driven not only by emerging markets like China, India, Middle East and Central and South America “building new” infrastructure, but by the established markets like North America “replacing antiquated” infrastructure.  Townsend’s multi-client report on bi-modal HDPE, an important grade for pipe, is scheduled to publish in October 2011.  For more information regarding any of Townsend’s services including the Townsend Polyethylene Report, Townsend’s Plastic Buyers Database, Townsend’s Plastics Market Monthly (resin pricing) or cost modeling contact Frances Davidson at 281 873 8733 Ext. 120 (fdavidson@townsendsolutions.com) or Peter Callais at  281-873-8733 Ext. 150 or via email at  (petercallais@townsendsolutions.com).

The Brazilian based company, Braskem, has announced their intended acquisition of Dow’s Polypropylene business. This is a deal that is extremely convenient for both companies according to their future strategies. Based on the recently published 2011 Townsend Polypropylene Report, we forecast the North American and Western European markets to grow at only 2.5% and 2.1%, respectively, per year in the next 5 years, well below the forecasted global PP growth rate of 5.0%/year.  However, this acquisition isn’t justified from a market perspective alone.

It’s been some time since Dow signaled that their PP business was not in its future strategy. Low margins, especially in the US, a commodity based product line (non-technology-differentiated) and a necessity of new investments to keep the business growing were some of the reasons for this divestment. As stated by Andrew N. Liveris, Dow's Chairman and Chief Executive Officer recently: “This business has delivered historic margins that do not meet our expectations moving forward and is no longer core to Dow’s strategy. We are shifting our Plastics portfolio from a commodity focus to that of a performance focus. This divestment is directly in line with that strategy, and allows us to continue to focus on our three main priorities: retiring debt, remunerating shareholders and investing in our innovation agenda so that we deliver consistent earnings growth.”

Since 2002, Braskem has had aggressive expansion through acquisitions and strategic alliances, in order to position itself as one of the largest global petrochemical companies. With this acquisition, Braskem becomes the #2 polypropylene producer in North America and gains a foothold in Western Europe, a region that was being served only by a Braskem sales office. Also with this acquisition, the company acquired an amazing platform of innovative PP products such as the INSPIRE™ Performance Polymers. It’s important to mention that the catalyst and technology businesses are not part of this deal and are being kept by Dow.  Braskem continued to generate good margins with its operations globally, generating EBITDA in 1Q2011 US$ 570 MM.  At this acquisition price (US$ 340 MM, 6.7x PP Dow EBITDA) neither its cash flow nor its “Investment Grade” will be affected.  When this purchase is final, Braskem will have a global position in the polypropylene market and will continue to strengthen its position in polyethylene with their new investment in Mexico with Idesa.

Could this be the first sign of a growing trend?  As we see more announcements of investments in the US and Canada due to increased availability of shale gas, Townsend believes this will create new mergers and acquisitions opportunities around the world as companies look to better position themselves in the global polyolefins marketplace.

For more information on the polypropylene industry or to obtain a copy of our newly released 2011 North American and Western European Polypropylene Market Study reports please contact Roberto Ribeiro at +1-281-873-8733 Extension 155 or email rribeiro@townsendsolutions.com .

Following a decline of -7.1% in 2009, the consumption of Polypropylene in Central/Eastern Europe bounced back with an amazing growth of 21.5% in 2010, on account of higher domestic and export demand for plastic products. While the area was hit hard by the global financial crisis in 2009, strong GDP growth averaging 4.1%/year is projected for the next five years, sustaining. This growth will be supported by (1) ongoing industrialization and infrastructure development, (2) strong growth in consumer products, and (3) Russia’s major investment in new oriented PP film lines.

In terms of capacity, several new PP plants have been brought on-stream in this region over the past few years and six new plants are currently being planned for the region and are scheduled to come on-stream during 2011 to 2015. New plants are planned for Russia, Uzbekistan and Kazakhstan. With these capacity additions, the region is expected to have a net surplus of PP, with net imports dropping from 995 kt in 2010 to 867 kt by 2015. Of note, CEE will move from to a net import position in 2010 of 419 kt to a balanced foreign trade position and be a net exporter of 5 kt in 2015.

Townsend’s 2011 Central & Eastern Europe Polypropylene Market Study is available now. To obtain a copy of this report please contact Frances Davidson at +1-281-873-8733 Extension 120 or email fdavidson@townsendsolutions.com .

Newly published research by Townsend Solutions reports that North America’s HDPE/LLDPE/Swing PE consumption is projected to increase from 12,230 kilotonnes in 2010 to 14,857 kilotonnes in 2015. At the same time, average HDPE/LLDPE/Swing PE capacity for the region is forecast to increase from 15,541 kilotonnes in 2010 to 15,866 kilotonnes in 2015. This means that, in the absence of further capacity announcements, the consumption/capacity ratio for low pressure PE in North America will increase from 78.7% in 2010 to 93.6% in 2015.



The 2011 Townsend Annual Polyethylene Report detailing global consumption, capacity and trade is available now.  To obtain a copy of this report please contact Peter Callais at +1-281-873-8733 Extension 150 or email petercallais@townsendsolutions.com.

Polystyrene resin prices fell in June as feedstock prices dipped but the declines were hampered a bit by tight supply caused by several plant outages in May and June.

Both ethylene and benzene contract prices were down in June. The volume-weighted-average for Polystyrene Crystal resin grades dropped 2.2 cents-per-pound (CPP), while the volume-weighted -average for HIPS resin grades fell 2.1 cpp in June.

More than three-quarters of the Polystyrene resin buyers reporting their prices to the PMM (Plastic Market Monthly) reported lower prices in June.  

PMM data providers are projecting a 2.8 cpp decline in the volume-weighted-average price for Crystal Polystyrene resin in July and a 2.0 cpp decrease in HIPS resin prices.

Townsend's PMM benchmarks monthly transactional resin prices for PS, PVC, PP Copolymer, PP Homopolymer, PET, LLDPE, LDPE, HDPE Molding and HDPE Extrusion in the US and Canada.  To participate in the benchmark or obtain subscription information please contact Terry Ulery at +1-281-873-8733 Extension 133 or email to tulery@townsendsolutions.com.

According to the recently published Townsend Polypropylene Report on Global Consumption, Capacity and Trade, polypropylene (PP) consumption increased 7.3% in the US, Canada and Mexico in 2010, the first year since 2004 that consumption has grown. Although consumption was dramatically reduced in 2008/2009, the strong recovery can be attributed to the stimulus package for autos and appliances and restocking of the supply chain which was de-inventoried during the recession. Mexico’s growth was 13.2%, nearly double its more developed neighbors.  Townsend forecasts modest growth in PP consumption at about 2.5% AAGR in the countries comprising NAFTA for the period 2010 to 2015, with the strongest growth in the automotive, sheet and non-woven segments.

 

For more  resin-specific consumption and growth forecast data by world region, process, market or application segment please contact us via email or call +1-281-873-8733.

PVC resin prices in the US and Canada continue to gradually push upward as Ethylene prices climb higher and demand strengthens in an already tight PVC market.

According to Townsend’s Plastic Market Monthly, 90% of buyers who reported their April pricing to our market analysts experienced increases in the prices they paid for PVC resin, with the average price for all PVC resin grades climbing 2.8 cents per pound in April to 46.8 cpp. 

Traditionally, exports have taken up the slack in sales resulting from sluggish demand for PVC in the US construction and housing industry, which accounts for three-quarters of all domestic PVC demand.  Seasonal demand in the domestic PVC market is expected to rebound causing cuts in export production which will further tighten the market and help fuel price increases.

The crisis in Japan also had a significant impact on US PVC supply/demand.  Imports from Japan plummeted, as expected, due to plant outages caused by the earthquake and tsunamis.  Three PVC plants, with a combined capacity of 818,000 mt/year, representing 41% of Japan’s total PVC production, shut down.  Demand for US resin from countries normally importing from Japan is causing shortages to some US buyers. 

At present time, Japan is still dealing with rolling blackouts and the looming summer power usage restrictions, which will likely disrupt pipe factory operations; however, most plants are expected to resume operations by the end of May. Taking into account the situation in Japan coupled with high oil prices, PVC resin prices appear likely to continue their upward climb, at least in the immediate future.   Email Terry to receive a sample PVC Pricing Report.

Ethylene contract prices climbed higher again in April, settling up another 3.5 cpp for the month at 57.25 cpp, with more increases expected in May.

Any relief in sight? Hopefully. Crude oil prices did dip in the first week of May, falling below $100 barrel for the first time in weeks. There is also a lot of talk among ethylene producers about adding capacity in the next few years. The recent discovery of large quantities of natural gas in shale rock throughout North America is providing a new, less expensive option for ethylene feedstock and production.

Last month, Dow Chemical, Chevron Phillips Chemical, Nova Chemicals and Westlake Chemical all announced plans to increase North American ethylene production. LyondellBasell also threw its hat into the ring in early May with the announcement by CEO Jim Gallogly the company is looking at expansions at existing plants, possibly in Channelview and La Porte, Texas, in the next few years that will increase ethylene output by about 500 million pounds a year. The company is also reportedly considering the construction of a cracker in a joint venture with other producers.

Propylene monomer prices are expected to reach record high levels in April – rising as much as 20% in one month – and that increase and possibly more is expected to be passed on to Polypropylene buyers very quickly. Supplier nomination letters are coming with a flurry, announcing double-digit increases, mid-month increases and pricing levels that have never been seen before in the Polypropylene market.

 

Tight propylene supply is to blame after a large number of first quarter 2011 refinery turnarounds. More than 20 US refineries were offline for at least some time during the first three months 2011. High crude oil prices also play into the mix. Not surprisingly, demand for PP has dropped and some processors are looking into material substitutions, but with long approval processes and higher polyolefin cost across the board, many are simply stuck paying the higher prices.

 

Savvy resin buyers monitor real transactional pricing. Townsend’s Plastic Market Monthly (PMM) is the only pricing publication based on real transactional prices reported directly by resin buyers and covers 11 unique PP resin grades. Each monthly report contains historical pricing data, pricing projections for the upcoming month, monomer and feedstock pricing, current economic data affecting the markets, insight on inventory levels, and news about current supply, demand and market conditions. In exchange for transactional data, qualified PMM subscribers receive preferential pricing on annual subscriptions and access to more than 20 years of historical price data.  Email Sue Thackeray to receive the April PP Pricing Reports.

Newly published research by Townsend Solutions reports that global EVA consumption is forecast to grow at  an equivalent AAGR of 5.7% through 2014 to almost 4,400 KT, significantly higher than global GDP growth rates. Solar panel encapsulant film and solar battery sheet sealant markets are fueling this high growth.

According to David Anderson, Director of Townsend’s Global Polyolefins Consulting Practice, “Solar encapsulant film applications will exhibit growth of about 25%/year and solar battery sheet sealant markets will exhibit about 20%/year growth in applications using HEVA (>25% VA content resins) and MEVA (17 – 25% VA content resins). These two markets alone are forecast to consume 20% additional MEVA and HEVA’s over the 5 year period. The forecast for MEVA content resins (17-25% VA content) is also strong in other applications like the EVA foam and footwear applications.”

Of the new EVA capacity additions currently planned over the next 5 year period, about 39% of this volume will be located in Middle East/Africa region, 33.5% in Other Asia/Pacific, 16.9% in China and 12.4% in South Korea. South Korea, India, Other Asia/Pacific, China and Japan are forecast to have total EVA growth rates of > 7.0%/year which is well above the average total EVA global growth rate of 5.7%/year.

These global growth projections could be exceeded if sudden oil price escalation multiplies the value of solar generated electricity and the world economies increase their focus to invest in clean energy. The key to sustaining overall EVA growth will be in how the petrochemical industry responds in meeting demand for HEVA’s and MEVA’s. To meet the growing demand of MEVA and HEVA, autoclave capacity might be rationalized in favor of tubular processes; however, this comes with downstream pelletizing and handling investments. In the film and non-packaging markets, there is evidence that HAO mLLDPE and Plastomers are penetrating markets that use VLEVA (1 – 6% VA content) and LEVA (7 – 16%) markets. No matter how you look at it, there is a “bright” future for EVA.

To learn more about Townsend reports on global EVA, HDPE, LDPE, LLDPE, mLLDPE, C6, C8 or PP markets please contact Frances Davidson at fdavidson@townsendsolutions.com

Beginning in March, more than 3000 European Polypropylene processors will have the opportunity to provide extensive feedback to their resin suppliers regarding product and service offerings via the global market research firm, Townsend Solutions.

Townsend is launching its 2011 Europe Polypropylene Customer Satisfaction & Loyalty Survey (CLASS). Sponsored by major polymer suppliers including Borealis, INEOS, LyondellBasell and SABIC, Townsend’s CLASS programs are considered the industry standard for independent, third-party perspective and insight into the needs and expectations of the plastic processing community.

“Representing over 9500 KT of annual polypropylene consumption in 2010, Europe (Western, Central & Eastern), is one of the largest PP markets in the world,” stated David Anderson, Director of Global Consulting – Polyolefin Solutions for Townsend. “The economic challenges of the past two years have dramatically affected several application segments for polyolefins, with European markets being among the worst hit. Customer requirements and expectations are changing, and as a result raw material suppliers are rethinking their service strategies. Participating in this survey is an unparalleled opportunity for PP buyers to provide candid opinions and valued feedback to their raw material suppliers.”

Townsend will explore plastic processors’ changing priorities and their satisfaction with the performance of resin suppliers on more than 15 key issues ranging from product performance to sustainability. For more information on Townsend CLASS programs, or to schedule a convenient appointment to participate in the survey, please contact Ms. Barbara Mitchell, Director of Customer Research for Townsend at +1-281-873-8733 Extension 173 or email bmitchell@townsendsolutions.com .

Further PET price increases are on the way due to rising feedstock costs, but at least they have shrunk. Eastman just announced that the December 1 increase of 6.0 cents per pound (cpp) has been reduced to 4.0 cpp. The increase brings the total producer price announcements to 30.0 cpp for the year (see red bars).

Based on Townsend’s survey of North American PET resin producers, 16.0 cents of the total 30.0 cents have been implemented from January to November 2010 (see turquoise line). During the same time frame, PET resin buyers have indicated that they have realized a 9.0 cpp increase thus far on resin delivered from January to November (see blue line). Buyers indicated that they expect to realize more of November’s increase with December deliveries.

To begin the new year, Eastman announced a 3.0 cpp increase to take effect January 1, 2011. Feedstock prices for MEG, PX and PTA are continuing to rise significantly, due to higher than normal demand by polyester fiber producers. Sources indicated that the price of cotton rose to unprecedented levels, therefore creating more demand for polyester fiber, as a blend in textile manufacturing.

For more information about Townsend’s pricing services please contact Frances at fmoore-jones@TownsendSolutions.com

Braskem may be the first North American polypropylene supplier to announce a December price increase for resin.  According to their announcement,  Braskem’s polypropylene resins will increase by 3.0 cents per pound, effective December 1.

Spot PP resin prices have increased throughout the month of November, as supply of generic resin has tightened.  Spot prices may continue to rise as domestic demand has been strong and exports continue.

Braskem ranks as one of the top ten polypropylene suppliers in the Americas.  The chart illustrates market share for the top polypropylene suppliers, based on a survey of over 5000 resin processing plants in North America, Central America & South America. 

Townsend maintains a global database of buyers of all types of thermoplastics. To contact Townsend, please email Frances at fmoore-jones@TownsendSolutions.com.

Morgan Stanley’s outlook of a Petrochemicals Supercycle is but ONE possible scenario in an industry that is event driven. And, it is virtually impossible to predict all the events. In North America alone, the return of natural gas prices to about $4/MMBtu is an event that seemed impossible from 2004 to 2008. But now, natural gas prices are expected to remain low and stable due to increased supply via new shale-gas recovery methods, giving ethylene crackers inexpensive feedstock. That event alone is likely to attract investment for new cracker units.

Here’s a headline from today’s ACC newsletter, that is a game-changer for ethylene demand. “Unilever has created a set of sustainability goals, following Procter & Gamble's announcement, to replace 25% of its petroleum-based plastics with renewable materials by 2020.” Unilever added that PVC use would be eliminated by 2012 or 2013. Other consumer product companies have made similar announcements; if realized, the changes point to lower demand for ethylene-derived plastics.

Townsend’s research of the polyolefins markets forecasts that resin plants would be running grossly under capacity levels over the next four years, therefore requiring far less ethylene than their stated capacities imply. Townsend’s research in early 2010 shows that by 2014, if all planned additions were on target, polyethylene plants around the globe would run at an average of 70% of capacity. Similarly, by 2014, polypropylene plants would run at an average of 78% of capacity.

Townsend will re-evaluate supply and demand of polyethylene and polypropylene in early 2011 to produce new projections out to 2015.

Polyethylene prices are influenced by ethylene prices, but the supply-demand balance always trumps feedstock prices. Presently, demand for polyethylene resin in the United States and Canada is strong. Through September, HDPE domestic sales are up 8.35% compared to last year,  LDPE domestic sales are up 5.00%, and LLDPE domestic sales are up 6.58%.  Sales are keeping pace with production thus far this year and in the case of LDPE, sales have exceeded production by 1.08%.

This year is a good example of polyethylene price increases outpacing ethylene price changes. For the year, through October, ethylene contract prices have lost 0.25 cents per pound (cpp), while PE resin prices have allegedly gained 9.0 cpp during this same time frame. Townsend’s Plastic Market Monthly survey of resin converters did not see an increase as large as nine cents, yet the PE increases definitely outpaced ethylene’s.

Based on Townsend’s buyer survey, through October HDPE Extrusion resin prices were up 0.8 cpp for the year, HDPE Molding resin prices were up 3.5 cpp , LDPE resin prices were up 2.6 cpp and LLDPE resin prices were up 4.4 cpp. These gains would imply that PE resin price increases were far exceeding that of ethylene. Remember that ethylene prices have shrunk 0.25 cpp during this same time period.

North America is not expected to have an oversupply of polyethylene in the coming years. According to Townsend’s PE consultants, capacity at North American PE plants sat at 19.589 million tonnes in 2009 and is projected to grow to 20.339 million tonnes by the end of 2012, based on producer’s announced plant changes or additions. Operating rates are expected to average around 85% or higher over the next five years. To keep margins at sustainable rates, producers of polyethylene are expected to continue monitoring their production to match demand.  A steep run-up in prices would occur if several plants shutdown unexpectedly.

For more information about Townsend’s benchmarks of prices, capacity, or consumption, please contact Frances at fmoore-jones@TownsendSolutions.com.

China has rebounded from the 2008 economic crisis and experienced a 12% surge in PE growth, with more moderate growth projected over the next five years. Domestic demand for commodity plastic is the main driver of China’s PE consumption with film applications topping the list with 57.5% of total PE consumption. The film fabrication process is used to make stretch wrap, shrink films, bags, sacks, food packaging and many other multi-gauge films used in China’s consumer market.


China is continuing to increase its use of recycled or reclaimed PE resins in place of virgin PE resins (HDPE and LLDPE) in the film markets for economic and cost reasons. It is also expected to enforce bans on the use of some polyolefins in significant PE applications. This move toward more environmentally friendly legislation is the main reason for the slower than expected growth in China’s PE market.

LLDPE consumption for film applications is projected to grow at 4.3% per year between 2009 and 2014.

To learn more about global polyethylene markets please contact David Anderson at danderson@TownsendSolutions.com.

Dow has lead the way, issuing a December price increase for all its polyethylene resins sold in the US. Prices have been nominated to increase 5.0 cents per pound (cpp) on December 1, 2010. Dow issued the price increase on October 20.

December resin price increases used to be rare, as this was a time when some resin processing plants shut down for long holiday breaks. But now, they seem to be the norm. The last two years, price increase announcements have “begun the year” a month early, taking effect in December as opposed to January. It’s kind of like the holiday lights going up earlier and earlier every year. Not only do retailers want your dollars, but commodity producers do too.

Polyethylene resin producers are continuing to push for a 4.0 cpp increase, effective October 1, while resin processors continue to resist. At least some things never change!

Prices, benchmarked in Townsend’s Plastic Market Monthly reports, showed about a 3.0 cpp increase in September, on average with flat to downward pressure in October. For example, the average price for HDPE Large Part Blow Molding Grade Resin was 59.9 cpp in September with a projected October price of 58.8 cpp. LLDPE Octene Liner Resin was 72.6 cpp in September, on average, with flat prices projected for October.

To learn more about Townsend’s monthly price reports or consulting services, please contact Frances at fmoore-jones@TownsendSolutions.com.

On October 15, 2010, Eastman announced that it would increase prices for all of its clear PET resin. The increase of 9.0 cents per pound (cpp) would take effect on November 1, 2010 throughout the US, Mexico and Canada. The increase is being announced to cover anticipated raw material price increases.

This may be the biggest price increase ever issued within the PET resin industry. I can’t remember one this big.

The November 9.0 cpp price increase nomination, follows a 2.0 cpp October nomination, as well as a 3.0 cpp September nomination. Townsend surveyed buyers and found resin transaction prices for bottle-grade PET resin moved up 1.6 cpp, on average, in September, with prices ranging from 67.0 to 79.0 cpp. Buyers projected prices would move up another 1.5 cpp in October, with a volume-weighted-average price of 78.1 cpp.

Townsend publishes resin transaction prices for C-PET, A-PET, and Widespec PET resin as well, at the beginning of each month. To inquire about Townsend’s PET monthly reports, please contact Frances at fmoore-jones@TownsendSolutions.com.