Issue 19/2019 - Global Chemicals Quick Facts

The global PE price war begins

Market analysts say a global polyethylene (PE) price war is unfolding
.
This is mainly driven by two factors, on the one hand, a large number of new production capacity is being put into production, on the other hand, due to the US-China trade friction, Brexit, regulatory pressure on single-use plastics, and other uncertainties, PE demand growth has stagnated
.
U.
S
.
PE producers have gained market share by driving down prices, which have fallen to multi-year lows, and competition from Middle Eastern exporters has pushed prices down further.
In Turkey, PE prices fell to a five-year low
.
PE prices in the African market have fallen to their lowest level
since Axis began recording 9 years ago.
In Europe, spot prices of linear low-density polyethylene (LLDPE) (butenyl) are at their lowest levels
since the 2009 global financial crisis.

In the first half of the year, U.
S.
base oil production and exports both declined

The latest data released by the U.
S.
Energy Information Administration (EIA) showed base oil production at U.
S.
refineries in the first half of 2019 was 29 million barrels, down from 34 million barrels
a year earlier.
Among them, total US base oil production fell the most in February and March, at just 4.
4 million barrels
.
In the first half of 2019, U.
S.
paraffin-based base oil production fell to 23.
8 million barrels, down 18%
year-on-year.
The highlight of U.
S
.
base oil production in the first half of the year was naphthenic base oils, which all reached five-year highs in January, April and May.
U.
S.
base oil exports also experienced a decline in the first half of the year, with total U.
S.
base oil exports at 20.
3 million barrels in the first six months, down from 22 million barrels
in the same period in 2018.

The outlook for the European polymer market is bleak

According to AMI Consulting's latest report, European Polymer Demand 2019, European polymer demand will grow
by only 1.
5% per year until 2023 amid a public outcry over plastic waste.
The European Commission has set a target of making all packaging plastics recyclable by 2030 and has asked industry to voluntarily take the lead
.
In addition, in March 2019, the European Parliament signed a bill banning the use of single-use
plastic products such as plates, cutlery, straws and cotton swabs.
The ban will take effect
in 2021.
By 2025, plastic bottles must contain at least 25% recycled content, and by 2030 the proportion will reach 30%.

Whether constrained by legislation or forced by consumer pressure, the polymer industry is facing significant adjustments
in the coming years.