NEW YORK (ICIS)--Global polyethylene (PE) markets are expected to remain tight through 2018 and into 2019, the CEO of producer LyondellBasell said on Friday.
“Last year globally we had very high operating rates – really near full capacity in ethylene and polyethylene. If you look at change in supply and change in demand from 2017 to 2018, supply growth is exceeding demand growth… by less than 1%,” said LyondellBasell CEO Bob Patel, on the company’s Q2 earnings conference call.
“Given that we’re starting at very high operating rates, coming off by about 100 basis points on operating rates is frankly negligible in terms of impact on market. In prior cycles we’ve seen reductions of 10% in operating rates or greater,” he added.
In addition, for HDPE, which accounts for around 70% of LyondellBasell’s PE output, demand growth is expected to exceed supply growth by almost 1.5% in 2018, he noted.
In 2019, overall PE supply and demand growth are expected to nearly match, while HDPE demand growth would exceed supply growth again, the CEO said.
“Who would have thought we’d have price rollovers when this much new [US] capacity comes on?” said Patel.
“If by the end of the year operating rates have dropped 1%, in my view, we still have a very tight market with not much capacity coming in the next couple of years… We’ve got a pretty tight market with normal seasonality,” he added.