• PT Youtube
  • PT Facebook
  • PT Linkedin
  • PT Twitter
11/15/2013 | 1 MINUTE READ

Higher PE Prices Likely for 2014

Facebook Share Icon LinkedIn Share Icon Twitter Share Icon Share by EMail icon Print Icon

Why are PE prices likely to be higher and not lower next year? In his recent 2014 outlook market update report, Mike Burns, v.p. of PE for Resin Technologies, Inc. (RTi), Fort Worth, Texas, ventures that 2014 average PE pricing will increase between 2% and 7% above the current price level.  Says Burns, “The price of oil has nothing to do with the cost to make a pellet in North America. The price of oil has everything to do with the price of the pellets globally.”


As previously reported, the cost to produce ethylene has been flat all year, while PE prices have increased 14-16 ȼ/lb. Resin suppliers have maintained a strong price position with above average inventory levels.  Polyethylene buyers should not expect new lower cost feed stocks to reduce prices, according to Burns, who lists four contributing factors that have resulted in this PE price escalation scenario:


Supplier consolidation and discipline: ‘The Big 8’ becomes ‘The Bigger 4’

▫ Exxon/Mobil = ExxonMobil

▫ Dow/Carbide = Dow

▫ Lyondell/Basell = LBI

▫ Chevron/Phillips = CP Chem

▫ Nova = New owners

▫ Huntsman/Flint Hills closed down

▫ Rexene closed down

▫ Ineos, Total, Westlake and Formosa are followers without a complete PE portfolio

Oil sets the global pellet price

▫ PE prices are set by the highest feedstock—oil or naphtha.

▫ A floor has been created due to the higher cost of oil. $90/barrel oil =  60 ȼ/lb pellet cost in China.

Inventory and exports

▫ North America’s low cost allows incremental pounds of inventory to be exported to any region.

▫ Events—plant disruptions and planned maintenance continue to reduce availability.

PE is not a commodity

▫ Higher quality resin and consumer expectations have created highly specified resin requirements. Flexibility has been reduced for the processor.