Some Key Takeaways from GPS 2019

Held in Houston in early June, sustainability loomed large as a major theme of the seventh Global Plastic Summit (GPS2019), with nearly 300 attendees from several countries. Key panel discussions on the topic included presenters from IHS Markit and PLASTICS, the hosts of these conferences, and companies representing the industry across the chain—from resin suppliers, to processors to brands.

Examples included the keynote panel, titled Sustainability. Moderated by Lyn Tatem, v.p.  IHS Markit and publisher of IHS Chemical Week, it included: Nova Chemicals’s v.p. of PE markets Greg DeKunder; PepsiCo’s v.p. of global sustainable plastics Burgess Davis; Westfall Technik’s v.p. of procurement and sustainablitly Allison Lin; Mars PetCare’s global commercial lead for packaging Barnaby Wallace; and, ACC’s managing director Keith Christman.

Another was the Game Changing Sustainability Panel, moderated by Patty Long, interim president and CEO of PLASTICS, which included Dow Chemicals’s director of sustainable chemistries Rich Helling; Sealed Air Corp.’s global recycling director Vince Herran; and PLASTICS’s v.p. of government affairs Scott DeFife. Other presentations on sustainability and the circular economy included Braskem and SABIC reporting on their initiatives on integrating recycled and renewable materials with their traditional virgin material supply chains.

Among the major highlights at all GPS events are the five-year forecasts (in this case 2019-2023) on volume commodity resins presented by IHS Markit experts listed below. Here are key takeaways for PE, PP, PET, PS, and engineering resins.

PE—Nick Vafiadis, v.p., plastics, Global Dynamics Drive Market Transition

 ▪  Transition from suppliers’ global profit margin strength to oversupply.

 ▪  This is driven by record capacity additions and demand deceleration.

 ▪  Suppliers’ margins will trend lower.

 ▪  PE prices will trend toward global parity.

 ▪  Global sustainability movement gains traction and dampens demand.

 ▪  Sustainable products may be necessary to maintain a “social license to operate”.

PP—Joel Morales, executive director, polyolefins Americas, Improving Supply Expected to Continue to Support Healthy Demand.

▪  PP returns to a balanced market as an impressive group of new North American PP projects are underway or planned.

 ▪  Non-integrated PP on its own will not be feasible.

 ▪  Asia supply and demand likely to swing the market.

 ▪  Quick builds in Asia (including PDH units) is a new reality of the global PP market.

 ▪  PP competitiveness to result in steady demand.

PS—Javier Ortiz, associate director, Polystyrene/Polyolefins, Polystyrene: The Calm After the Storm?

 ▪  Despite a severely challenging 2018, the PS market continued to grow, albeit at a much slower pace.

▪  However, the same obstacles remain in place over the long-term: cost, sustainability, and competing with “greener” materials.

▪  Expect more widespread bans on disposable goods—whether logical or not.

 ▪  Meanwhile, keep an eye on chemical recycling options.▪ Hopefully, there is still time to prevent future loss of demand.

PET—Tison Keel, director, PET, PTA & EO derivatives, PET Becomes a Buyer’s Market.

 ▪  rPET will increase in demand but will not replace virgin PET.

 ▪  Not enough collection in the U.S. and, for all global regions, the issue of rPET’s high pricing is a challenge.

 ▪  As of early June 2019, all three major PET resin players had acquired PET recycling businesses.

 ▪  PET overcapacity will make North American PET market a buyer’s market. Also, pushing out PET imports has not proven easy.

.▪  Making it more of a buyer’s market will be feedstocks paraxylene and MEG which are long in supply with depressed prices projected.

Engineering Thermoplastics—Brendan Dooley, global director, engineering resins.

Nylon 66

 ▪  Significant capacity additions of global intermediary ADN already underway and in the next couple of years, which include those from Ascend Performance, Butachimie, Invista Orange, and Invista Shanghai, will result in a 46% capacity increase.

 ▪  During 2020, ADN supply should become more balanced and nylon 66 will become more balanced and more competitive.

 ▪  By 2022, nylon 66 markets are expected to be well supplied.

Nylon 6

 ▪  No capacity changes within the five-year forecast expected.

 ▪  Cash cost, down by 20%; market prices, down by 5% year-to-date.

 ▪  Nylon 6 overcapacity means prices will follow feedstock costs—downward.

PC

 ▪  No capacity changes expected in the five-year forecast.

 ▪  Trade: U.S. imports, up 32%; U.S. exports, up 4%.

 ▪  Cash cost, down 10% year-to-date; market price, down 3% year-to-date.

 ▪  Global overcapacity is projected for PC as China is boosting capacity by 30% in 2020—expect very competitive pricing.

ABS

 ▪   Supply concerns for feedstock acrylonitrile. INEOS Styrolution to start up new 220.5 million lb/yr ASA/ABS plant in 2020.

 ▪  Cash cost, down 15% year-to-date; market prices, down 4% year-to-date

▪ ABS prices to remain relatively stable but if economy improves, you can expect a tight resin market and higher prices.