Commentary: A wave of new polyethylene projects in North America could boost capacity by 28.7%

14 June 2013 09:28  [Source: ICB]

Polyethylene capacity in North America could increase by 5.58m tonnes/year in a very short time. Ten companies are planning 11 new expansion projects

prepare for a plethora of plastic pellets. The groundbreaking at NOVA Chemicals' new 1m lb/year (454,000 tonnes/year) linear low density polyethylene (LLDPE) plant in Alberta, Canada marks the start of a huge wave of polyethylene (PE) ­capacity set to come online between 2015-2017 in North America.

Already 10 companies have announced plans to ­expand PE capacity in the region, and between the 11 planned projects nine have defined capacities amounting to a total of 5.58m tonnes/year. This represents a 28.7% boost to the existing North American ­capacity of 19.4m tonnes/year, according to an analysis by ICIS - all potentially in the span of about three years.

Polyethylene producers are seeking to capitalise on the US shale gas boom, which is providing cheap ethane feedstock for ethylene, and in turn PE.

For ethylene, US capacity could rise by 39.6% by 2020 if all the planned projects are completed.

In May, Formosa Plastics revised upwards the ­capacity of its planned ethane cracker in Point Comfort, Texas, from 800,000 tonnes/year to 1.2m tonnes/year.

That move brought the tally to 10.5m tonnes/year of new ethylene capacity planned.

While some of the PE production will be absorbed by the growing US economy, much will be targeted for export - especially in light of the improved cost position for US producers.

For 2012, US export sales of PE accounted for roughly 17-22% of total sales for the year, according to the American Chemistry Council. By 2020, some analysts predict that share could rise to as much as 42%.

Additional contribution from Becky Zhang in Singapore and Michelle Klump in Houston

By: Joseph Chang
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