Polymer Plunge? Year-End Competition and High Available Capacity is Driving Predicted Spot Price Declines for PE!

Companies Mentioned: Dow, Borouge, ExxonMobil, LyondellBasell, Sinopec, Trinseo, ChemOrbis, ADNOC, GAIL, Sinopec, TotalEnergies, Coterra, Ovintiv, PepsiCo, L’Oreal, Braskem, Dow, Winpack, Nova Chemicals, Target, Ball, Ikea, Nestlé, H&M, Berry Plastics, Target, Costco, Sonoco, Packaging Corp of America, Sealed Air, Amcor, Graphic Packaging, Silgan
Commodities Mentioned: Polyethylene, Ethylene, Polycarbonate, LDPE, HDPE, Crude Oil, Natural Gas, Ethane, Naphtha, LNG, NGL, Bioplastic, Bio-Polyethylene, Ethanol, Hydrogen

Key Findings

General Thoughts: As we have been projecting for several months, spot polymer prices are falling in 4Q24 amid improved supply and weak demand – producer cost position differences are mostly driving relative performance.
Supply Chain/Commodities: We discuss global PE market developments, US inventory destocking into year-end, putting pressure on export markets, and why an abrupt rebound in spot PE prices is unlikely in the near term.
Energy/Upstream: The US ethylene cost advantage based on ethane feedstock remains among the best globally, and we discuss global cost curve trends and the recent drop in USGC ethane values relative to US natural gas.
Recycled/Renewable Polymers: We discuss bioplastic market developments, the challenges of scaling and lowering costs to compete with more streamlined and cheaper alternatives, and recent sustainable plastic news.
Downstream/Other Chemicals: We discuss the Dow views of polyethylene (PE) demand growth issued at its May investor day and China’s substantial role in global PE supply, demand, and trade in the international market.