US to export more LLDPE to Asia after Saudi attacks

Market: Petrochemicals
17/09/19

Increased volumes of US-origin linear low-density polyethylene (LLDPE) are likely to head for Asia-Pacific amid an unexpected supply shortage from Saudi Arabia.

LLDPE supplies from Saudi Arabia are expected to tighten in the coming weeks, leading to reduced exports to Asia-Pacific.

Saudi-based petrochemical producers are coping with reduced feedstock in the aftermath of the attacks on two key oil installations in Saudi Arabia on 14 September. The attacks at the Abqaiq plant, the world's largest crude processing facility, and the Khurais oil field infrastructure forced state-owned Saudi Aramco to shut in 5.7mn b/d of crude output.

Saudi LLDPE production is likely to be affected in the coming weeks, with producers telling international clients privately to expect supply delays to existing orders. Saudi producers are regular sellers to China and southeast Asian markets such as Vietnam and Indonesia.

As US increases its LLDPE output this year, producers such as Dow and ExxonMobil are able to comfortably meet any shortfall from Saudi Arabia from their Texas operations.

Dow Chemical operates a 400,000 t/yr LLDPE plant in Freeport, while ExxonMobil has a 650,000 t/yr LLDPE plant at Mont Belvieu. ExxonMobil also started up its 650,000 t/yr LLDPE plant in Beaumont in late July.

US-origin PE is sold directly by producers. Trading firms such as Vinmar and Tricon, which have a presence in Asia-Pacific, also sell US-origin LLDPE to their southeast Asian customers.

The US also plans to debut new LLDPE capacity this year. Production at Sasol's 450,000 t/y LLDPE plant in Lake Charles, Louisiana is ramping up. Sasol has an office in Singapore, where it is expected to market its products to Asia-Pacific customers.

US-origin material is still subject to restrictive tariffs in China amid the continuing US-China trade war, making southeast Asia the most viable market for US producers.

LLDPE prices were assessed at $870-880/t cfr southeast Asia and $830-840/t cfr China on 12 September prior to the Saudi attacks, according to Argus data.

Indicative offers from global producers in China were at $880-900/t cfr China yesterday, although the response from key plastic converters was muted.

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26/12/24

Viewpoint: US PGP prices set to rise in 2025

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Viewpoint: US BD demand awaits 1Q rebound as risks loom

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23/12/24

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23/12/24

Viewpoint: US LPG cargo premiums poised to fall

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Viewpoint: Protectionist policies muddy US PE outlook

23/12/24

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23/12/24

Viewpoint: Protectionist policies muddy US PE outlook

Houston, 23 December (Argus) — Potential new tariffs combined with protectionist policies from other importing countries are clouding the outlook for growth in the US polyethylene (PE) market heading into 2025. US president-elect Donald Trump threatened a 25pc tariff on all imports from Canada and Mexico, and at times has threatened as much as a 60pc tariff on all goods imported from China. Any new tariffs open the US up to retaliatory tariffs from the three countries, which have historically been among the top destinations for US PE exports. Brazil, another major trading partner with the US, recently raised import tariffs on PE to 20pc. On top of that, Brazil is in the midst of an anti-dumping investigation into US PE, which if successful would raise the tariff on US PE by an additional 21.4pc, bringing the total tariff for US PE in Brazil to 41.4pc. US PE exports in the first 10 months of 2024 totalled roughly 11.6mn t, with 16.4pc sold to China, 13.3pc sold to Mexico, 10.8pc sold to Brazil and 7pc sold to Canada , according to data from Global Trade Tracker (GTT). US PE producers are increasingly relying on exports, particularly with new capacity still set to come online in the next two years. This includes a new 600,000 t/yr linear low density polyethylene (LLDPE)/high density polyethylene (HDPE) swing plant from Dow set to start in the second half of 2025, as well as 2mn t/yr of HDPE capacity from Chevron Phillips Chemical's joint venture with Qatar-based QE in 2026. Exports as a percentage of total US and Canadian PE sales has been growing since 2016, when it was less than 25pc to crossing the 50pc threshold for the first time in November of this year, according to data from the American Chemistry Council (ACC). ACC data combines the US and Canada and considers trade between them as domestic rather than exports. With the US and Canadian PE markets largely functioning as one, the potential tariffs on product from Canada could cause problems for US buyers as well as Canadian suppliers, whose competitiveness in the region could be limited by new tariffs. "It would be a huge problem," said one US PE buyer who purchases resin from suppliers in both countries. For one particular grade of PE, the buyer said there are only two suppliers, including one producer in Canada and one in the US. If tariffs were imposed on Canadian material, it would suddenly make that particular grade more expensive because it would mean the US producer would no longer need to match competitive offers from Canada. Retaliatory concerns While US buyers are concerned about having to pay new duties on imports from Canada, US producers are also worried about potential retaliatory tariffs from other countries, such as China, and new duties and potential tariffs in Brazil. US PE exports to China totaled roughly 1.9mn t in the first 10 months of 2024, an amount that could not be easily absorbed by many other countries if new tariffs limit sales into that country. And in Brazil, US PE exports totaled roughly 1.26mn t in 2024 through October, another huge chunk that is at risk if the new anti-dumping duties against US PE are implemented. "Brazil is a huge market for the US. It's a big deal," said one US trader. "Producers can ship to countries around Brazil, but that will not cover everything we are losing. Where will it all go?" New outlets are opening up for US product in places such as Europe, where some global capacity has shut down. ExxonMobil, for instance, announced in April it was permanently shutting down its Gravenchon cracker and associated derivative plants in France, including a 420,000 t/yr HDPE-LLDPE swing unit. With the closure of that plant, sources have said ExxonMobil is exporting more volume from its cost-advantaged US assets to the region. But there is a limit to how much US export volume can be absorbed because of shutdowns in other regions. While many market participants are hopeful that proposed tariffs will not materialize, the uncertainty is making it difficult to plan for 2025, sources said. "Speculating on it is a waste. You don't know what is going to happen first, you don't know what the reaction is going to be," said one buyer. "All you can do is try to get the lowest prices you can and work a little bit of flexibility into your contracts." By Michelle Klump Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Viewpoint: rHDPE packaging grade demand solid into 2025

18/12/24

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18/12/24

Viewpoint: rHDPE packaging grade demand solid into 2025

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