NPE ’09: Natgas prices, climate and health issues worry US plastics

23 June 2009 23:16  [Source: ICIS news]

CHICAGO (ICIS news)--Natural gas pricing and availability along with likely federal mandates on health care and climate change pose the biggest challenges to the US plastics industry, a top official said on Tuesday.

Bill Carteaux, president of the Society of the Plastics Industry (SPI), told a press conference that “energy remains a significant issue for our industry, especially in natural gas”.

Natural gas is a principal feedstock for US production of industrial chemicals and resins, and consequently impacts the operating costs of the downstream plastics sector.

“It’s fortunate that gas prices have moderated lately,” Carteaux said, referring to the Henry Hub natural gas spot price that has been primarily in the $4/m Btu range for much of this year. 

Spot prices for natgas ranged as high as $10/m Btu last year and spiked to $12/m Btu in 2005, eroding profit margins for many gas-dependent producers and forcing multiple plant shutdowns, especially among fertilizer manufacturers.

“What happens with natural gas prices will continue to be an issue for plastics,” Carteaux said.

One of the federal legislative initiatives that could have broad impact on the availability and price of natural gas - the pending climate change bill in Congress - is also high on the plastic industry’s list of worries, Carteaux said.

Depending on its final shape, the climate change bill’s provisions for a cap-and-trade emissions reduction mandate could impose sharply higher energy prices on such energy-intensive industries as plastics manufacturing.

A cap-and-trade provision in the climate bill is expected to force a wide-scale move among electric utilities away from coal as a generator fuel to cleaner burning natural gas, a paradigm shift that would sharply raise demand and prices for natgas.

Carteaux said that pending health care legislation in Congress presents the third greatest challenge to his industry. It too could impose costly taxes and insurance mandates on business owners.

Carteaux spoke with reporters during the National Plastics Exhibition (NPE).  The conference and massive trade show at McCormick Place on Chicago’s lakefront is sponsored by SPI and runs through Friday.

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