UPFRONT

Those estimates for planned added capacity do not include any potential new capacity from Thailand-based PTTGC in Ohio. The company (PTTGC) says they are still committed to do the project, but they are looking for partners, a difficult thing in this type of environment: investing when you are in a margin downturn,” he said.

PTTGC has yet to announce an FID and for the past couple of years it has been looking for a company to replace a former partner that left. The Ohio project was at one point seen as similar in size to that of Pennsylvania, that is, with production capacity of 1.6 million tonnes per year.

The North American polyethylene market

“In North America, this is in the U.S. and Canada, not including Mexico, capacity is about 33 million tonnes per year for all grades, high, low, and linear low-density polyethylene. Domestic demand is about 15.4 million tonnes, about half of the 2022 existing capacity, in rough numbers,” Sagel said.

The difference between production and demand is what North American producers need to export to find a balance in the market, he explained. Polyethylene exports have reached about a million tonnes per month, but they were stuck at that level, and they need to increase, Sagel said. If we have 33 million tonnes of capacity and you are only consuming about 15 million tonnes, you need to export 15 to 18 million tonnes to run your plants fully out; right now, we export about 12 million metric tonnes per year” Sagel said.

Even as shipping constraints are easing and despite producers apparently willing to increase exports, finding markets for the new resin production has not been easy.

“Logistics is not the biggest issue. The problem is more with what is going on in the rest of the world; so, the same economic conditions that you have in the U.S., you have them in China, Europe, etc.,” he said.

Polypropylene market fundamentals

In North America, “we have a 9.4 million tonnes of capacity for PP production, this is U.S. and Canada, and consumption is about 7.2 million tonnes. The balance is exports, and most of those go to Mexico,” Sagel said.

“We have two new plants, ExxonMobil (in Louisiana) and we also have a Canadian producer (InterPipeline) and what this is doing is making up some of the production losses that we had,” he said. The previous capacity addition for polypropylene had been a plant started by Braskem in Texas in 2021.

“These plants I think are going to be mainly directed toward the domestic market and are going to help decrease the tightness that we‘ve had up until now on the polypropylene market,” Sagel added.