Light olefins
Overview
The global light olefins market is made up of ethylene and propylene monomers. These product markets can be affected by a great many factors.
Ethylene is the most widely used commodity chemical and is produced globally in all major regions. It is converted into many products used in daily life like plastic packaging, durable goods, hygiene products and other consumer items. The ethylene market is driven primarily by regions of low production cost and regions of high demand growth. Polyethylene, ethylene’s largest derivative, represents about 65pc of global ethylene demand. Anyone involved in the ethylene industry – directly or indirectly – needs market and pricing insight to anticipate supply shortages and potential swings in pricing.
Propylene is the second most widely used commodity chemical and is produced globally in all major regions. Propylene is a volatile commodity because of its predominantly co-product nature and unpredictable supply, but recently the industry has been trending to more on-purpose production. It is converted into many products used in daily life like plastic packaging, durable goods, automotive products, and woven fabrics. Polypropylene, propylene ’s largest derivative, represents about 70pc of global propylene demand. Anyone involved in the propylene industry – directly or indirectly – needs market and pricing insight to anticipate supply shortages and potential swings in pricing.
Our light olefins experts will help you determine what trends to track and how to stay competitive in today’s ever-changing global market.
Latest light olefins news
Browse the latest market moving news on the global light olefins industry.
Viewpoint: Protectionist policies muddy US PE outlook
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.
Viewpoint: EU PVC margins to hold below average in 2025
Viewpoint: EU PVC margins to hold below average in 2025
London, 18 December (Argus) — European polyvinyl chloride (PVC) margins are likely to remain subdued in 2025, with a repeat of the sluggish demand and rising ethylene costs seen in 2024. Weakening European PVC consumption throughout 2024 was mainly underpinned by lower construction activity, a key demand driver. Construction purchasing managers index (PMI) data, compiled by S&P Global and Hamburg Commercial Bank (HCOB), show the eurozone construction PMI for 2024 peaked in October at 43.0, still way below the 50 mark that separates contraction and expansion. PVC market participants are cautiously optimistic that recent declines in interest rates from the European Central Bank (ECB) may help stimulate demand for home-builds in 2025, and improved PVC demand will follow. The ECB reduced rates three times in 2024, to 3.25pc. Rates may continue to ease in the short term, but as witnessed in 2024 this would take time to filter through to European PVC demand. Because of this, buyers are contemplating either maintaining or reducing contractual PVC volume commitments for 2025, noting struggles with passing raw material costs to customers. Anti-dumping duties (ADDs) on s-PVC imports from the US and Egypt helped to reduce excess supply in 2024, and while this is likely to continue into 2025 there is limited interest from buyers to source additional supply because of lower demand. Asian s-PVC imports remained minimal, with volatility in freight costs and longer lead times likely to suppress buying interest into 2025. Re-balancing act Domestic PVC producers focused on reducing inventories and operating rates for much of 2024 to keep the market balanced, with average operating rates between 60-70pc for s-PVC production and at the higher end of the range for specialty grades. But re-balancing proved to be a slow process in light of weakening demand, forcing European producers to keep operating rates and margins low for much of the year. Argus calculated s-PVC net production margins, based on feedstock ethylene costs in northwest Europe, averaged around €287.04/t between January-November 2024, lower by €109.04/t than during the same period in 2023 and around €73.40/t lower than the Argus 2015-23 average. Easing electricity costs in 2024 helped to suppress further PVC margin loss, but demand weakness throughout the year remained in favour of buyers as contract prices settled predominantly below the implied ethylene cost. With European ethylene prices likely to increase and PVC demand expectations suppressed throughout 2025, there could be another year of below-average margins for PVC producers. Argus assessed the December suspension PVC (s-PVC) preliminary contract marker for northwest Europe at €1,120/t on 20 December, reflective of a preliminary contract delta for December at minus €5/t. This is comparable to an ethylene monthly contract price (MCP) movement of minus €7.50/t for December. This raises the possibility of further supply consolidation in Europe to re-balance the market in the medium term, with smaller producers announcing potential closure of PVC production units in central and eastern Europe in 2025. Others plan to mothball some specialty PVC production lines, while others are seeking import licenses to supply PVC into emerging markets such as India. This is difficult to achieve because of cost-competitiveness. A rise in regional construction activity, and therefore PVC demand, will remain the quickest way to re-balance the market, helping to raise operating rates and margins back to above-average levels as buyers commit to more contractual volumes. By George Barsted and Michael Vitiello Integrated s-PVC NWE net margins €/t Eurozone construction PMI Index Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
E-PVC buyers build stocks ahead of US tariffs
E-PVC buyers build stocks ahead of US tariffs
Houston, 13 December (Argus) — Emulsion-grade polyvinyl chloride (E-PVC) producers and buyers are racing to build inventories ahead of potential US tariffs on imported goods, according to market participants at the Vinyl Week conference this week in Louisville, Kentucky. President-elect Donald Trump has said he would impose 25pc tariffs on all goods imported from Canada and Mexico after he takes office next month, and that he would raise tariffs on Chinese imports by 10pc. Tariffs on Mexican imports are of particular concern to buyers who rely on the country for some imported E-PVC, also known as specialty or paste PVC. Some US buyers at the conference sponsored by the Plastics Industry Association said a more expansive tariff policy would not only raise delivered prices for E-PVC, it also would also be inflationary for everyday goods. Higher prices could reduce consumer spending power and cut demand for E-PVC in flooring or automotive manufacturing. Other buyers of E-PVC said a more focused scope for tariffs that centered on supporting industry in the US could be beneficial. One flooring producer said tariffs could allow it to recapture market share for products like luxury vinyl tile that have been increasingly dominated by imports from countries like China. Flooring is one of the two largest end use consumers for E-PVC. Suppliers are taking precautions, even if the tariff policy proves to be limited. European producers with extensive warehouse networks in the US have been exporting even greater volumes to North America ahead of potential tariffs that Trump threatened during his campaign, as well before a potential resumption of dockworker strikes in mid-January. US distributors are building inventories of Mexican imports in order to beat the threatened tariffs. US dependence on E-PVC imports deepened after Orbia closed its 60,000 t/yr Pedricktown, New Jersey plant in the fourth quarter with plans to supply US cusomers from its plant in Marl, Germany. The closure leaves the US E-PVC manufacturing capacity at around 156,000 t/yr. While the E-PVC market is more niche compared to the suspension-grade market used in pipe production, the US is structurally short on supply for specialty resins. Many E-PVC buyers with operations on both sides of the Atlantic expect US demand growth to be stronger than in Europe. Some European producers have been raising operating rates above 70pc because exporting excess volume to the US was a viable option. Tariffs could challenge that strategy as higher import prices for US buyers would pressure export prices, and European producers are not inclined to cut prices, market participants said. If Trump does not implement his promised tariffs, E-PVC buyers and producers alike generally agreed that US market demand would be stable to up slightly in 2025. By Aaron May Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mexico’s industrial output falls 1.2pc in October
Mexico’s industrial output falls 1.2pc in October
Mexico City, 13 December (Argus) — Mexico's industrial production dropped by 1.2pc in October, driven by declines in manufacturing and mining, statistics agency Inegi said today. The seasonally adjusted industrial activity indicator (IMAI) reversed a 0.6pc increase recorded in September, surprising analysts who had expected a smaller contraction. Banorte had forecast a 0.1pc decline, while the market consensus pointed to a 0.6pc decrease. The sharper-than-expected downturn was largely attributed to a 1.9pc drop in manufacturing, which accounts for 63pc of the IMAI. This followed growth of 1pc in September and 0.4pc in August. Within manufacturing, transportation manufacturing — a key segment making up 12pc of the sector —fell by 4.3pc, reversing a 2pc increase in September and a 1pc uptick in August. Despite this decline, light vehicle production reached 382,101 units in October, up from 378,583 in September, on track to set a new annual record . Mexican auto industry association AMIA told Argus the drop in transportation manufacturing was unrelated to light vehicle production. Instead, Alejandro Cervantes, director of quantitative economic research at Banorte, suggested the decline could be linked to trucks and heavy-duty equipment manufacturing. "Despite [being] a negative month for industrial activity and possibly for aggregate economic activity, the fact is that we have seen a strong rebound in the production of vehicles," said Cervantes. Mining, which makes up 12pc of the IMAI, contracted by 1.9pc in October, following a 1.2pc decline in September. Oil and gas extraction fell by 0.9pc, marking its fourth consecutive month of contraction. In contrast, construction — accounting for 19pc of the IMAI — increased by 0.5pc in October after a 1.1pc increase in September. By James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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