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Global PE plant utilization will decline in 2020

/ Saturday, 29 October 2022 /

ICIS analysis says global polyethylene (PE) production is expected to decline for the rest of 2020 as capacity growth will meet the slowing demand of most end industries.

In the first phase of health emergency measures against the epidemic situation, although the supply of PE is limited by blockade and logistics problems in some cases, the demand for some specific applications (mainly for packaging purposes) is very good.

ICIS expects that after entering the second stage, with the slowdown of demand and the gradual recovery of global PE supply, it will return to the situation of obvious oversupply before the outbreak.

With regard to different PE polymers, the demand for food packaging, medical use and non durable consumer goods is still mainly in the low-density polyethylene (LDPE) and linear low-density polyethylene (LLDPE) markets.

However, the additional demand for these applications has gradually decreased, and there may be some differences in brand names.

Compared with other applications, the additional demand for medical packaging applications may last longer, although it only accounts for a relatively small proportion of the overall PE demand.

ICIS believes that PE demand in Europe will weaken in the next few months, and the level of demand in the last part of 2020 will be linked to the results of the current phase of gradual restart.

PE production in the US remained high in the first quarter, but inventories increased as a result.

In the current situation, Dow decided to idle some high-density polyethylene (HDPE) and LLDPE plants to balance supply and demand.

A similar decision was made by LyondellBasell, which announced a reduction in plant utilization.

Compared with pre epidemic expectations, export targeted PE capacity (many in the United States) currently has fewer opportunities to find destinations.

In Latin America and Europe, the growth expectation of PE demand in 2020 has turned negative. Even those regions with large market potential, the prediction of PE growth in 2020 has been greatly reduced.

However, due to the decline in US production and the rise in global upstream crude oil and naphtha prices, the US PE price for Europe in May increased by about $80 / ton compared with April.

The unplanned cracking unit problem has reduced the supply of some PE brands, and some sellers are informing the processors of the price increase in June.

Although demand for some applications continues to perform well, it is widely expected that PE demand will not reach January and February levels for the rest of 2020.

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