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Oversupply intensifies as new production capacity is put into operation
Oversupply intensifies as new production capacity is put into operationAccording to the latest news from ICIS, the global polyethylene (PE) market has fallen into the predicament of oversupply in 2019, and will face greater oversupply pressure in 2020 due to the aggressive expansion of production in the United States
.
Capacity will continue to increase significantly
Capacity will continue to increase significantlyAccording to ICIS's supply and demand data, in 2019, the world added 6.
95 million tons/year of PE production capacity
.
In 2020, the world will add 8.
34 million tons/year of PE production capacity: China will add 1.
825 million tons/year of LLDPE and 2.
985 million tons/year of HDPE; the United States will add 550,000 tons/year of LLDPE and 1.
05 million tons/year of HDPE.
Annual HDPE; Oman adds 440,000 tons/year of LLDPE and 440,000 tons/year of HDPE; Indonesia adds 400,000 tons/year of LLDPE; Russia adds 400,000 tons/year of LDPE; Philippines adds 250,000 tons/year tons/year of HDPE
.
The price war has started
The price war has startedIn the context of slowing economic growth and the US-China trade war, the PE price war has begun
.
Exports of new capacity from U.
S.
shale gas-based PE producers have been increasing in 2019
.
U.
S.
ethane-based integrated PE producers enjoy some of the world’s lowest feedstock costs, so there is room for further price cuts while still remaining profitable, but this is not the case for Asian naphtha cracker operators
.
In January 2020, the outlook for the Asian PE market remained bearish, mainly due to the following reasons: first, sluggish PE demand; second, manufacturers destocking; third, American Enterprise Products Partnership and Navigator's new construction at Morgan Point, the Houston waterway The PE export terminal was put into use
.
In Europe, although PE producers are also affected by US PE inflows, their profit margins remain positive
.
Oversupply intensifies
Oversupply intensifiesMarket participants predict that in 2020, the growth rate of global PE production capacity will accelerate, because China will replace the United States as the main country for PE production capacity growth
.
Although some projects in China may be delayed, the global PE market may still face a deepening oversupply
.
This is especially true if downstream demand growth continues to slow
.
Analysts believe that although China and the United States have reached a first-phase agreement, which is beneficial to chemical trade to a certain extent, the environment of slowing global economic growth will still exert pressure on boosting the PE market
.
