Nick Vafiadis, Global Business Director, Polyolefins and Plastics, IHS Chemical provided an update on the polyolefin market at the recent FPA Annual Meeting.

New ethylene capacity for the polyethylene industry is now beginning to come on line, but there are some changes developing that could alter the impact of the new capacity. The expected new capacity for 2017 is estimated to be around 13 million tons, which is a significant increase, about 1/3 additional capacity of the U.S. today. In spite of the large volume increase, there is a tight supply/demand balance, and even more new capacity is needed. For 2018, the ethylene supply could be tight again, which will keep prices high, and by 2020 ethylene demand will exceed capacity.

Global PP demand remains healthy and is forecasted to increase to 83 million metric tons by 2021, a 4.6% growth rate. The global market is heading towards an oversupply in 2017, with capacity growth exceeding demand by approximately 2 million metric tons, with most of the new capacity starting up in China.

Trump’s proposed Border Adjustment Tax (BAT) is creating uncertainty within the market as it is still developing and misunderstood. The proposal calls for a tax on imported products/materials coming into the U.S. at a rate of up to 25%. The proposal also exempts income associated with exports from the U.S. from taxes entirely. This BAT would discourage U.S. imports and encourage U.S. exports.

The full IHS Chemical Bi-Annual Polyolefin Report will be available to FPA members in second quarter of 2017.

For More Information

FPA members can view the presentation at www.flexpack.org by clicking on “Download Presentations from the FPA 2017 Annual Meeting” in the Spotlight section on the homepage.