North American exports of polyethylene (PE) and polypropylene (PP) resins are likely to decline this year due to the coronavirus pandemic. However, the decrease is unlikely to be as steep as previously worried, according to industry analysts during a session in the World Petrochemical Conference (WPC) 2020, which was held online on April 17.
As SSESSMENTS.COM noted, North American PE and PP are produced with feedstock natural gas liquids (NGLs), particularly ethane, which is typically cheaper than naphtha. However, the crash in oil prices amid the pandemic has eroded its low-cost advantage over naphtha. Hence, analysts previously expected that North American plastic resin exports would decline by around 80,000 TEUs, marking the first export decline since 2015.
This estimate came before OPEC+ and other oil producers agreed to cut supply to restore the balance in the global market. Now analysts forecast the decline would not be as steep as they previously feared. Moreover, China has resumed its economic activity and granted a waiver on a 25% tariff on US HDPE and LLDPE imports. Downstream converters also reported rising order for food packaging as well as single-use bags and other items worldwide amid the pandemic.
However, analysts expect producers in the US and Canada to reduce operating rates as margins are expected to turn lower. They also warned of dramatic change in outlook coming from unpredictable oil prices movement and trade policy change which removes the waiver.
