US exports of polyethylene surge to record high in October: USITC

US October exports of polyethylene climbed for a third consecutive month to reach a record high, according to data released Friday by the US International Trade Commission.

US exports of all grades of PE totaled 441,232.1 mt in October, up 13.2% month on month and 70.9% year on year, USITC data showed.
October's total represented an increase of 11.1% compared with the US' previous record of 397,052.2 mt, set in in June, with capacity additions over the last two years driving much of the increases seen in 2018.

By grade, US high-density PE exports totaled 255,671 mt in October, an all-time high and up 9.9% on the month and 85.8% on the year.

Linear-low-density PE exports, meanwhile, came to 72,928.1 mt to open the fourth quarter of 2018, up 14.9% compared with September and 73.9% higher than October 2017's total.

US low-density PE exports totaled 105,799.3 mt in October, up 20.6% month on month and 49.1% year on year, the data show.

RECOVERING FROM HARVEY

While the month-on-month increases in PE exports can be at least partially attributed to recent domestic demand shifts and capacity additions, the year-on-year gains were more heavily reflective of Hurricane Harvey's impact on the US Gulf Coast in the final two quarters of last year, when both US production and logistics were severely impacted for an extended period.

The US petrochemical industry -- and the PE sector in particular -- has been the primary beneficiary of the shale gas boom and its resulting abundant and cheap ethane that makes output competitive in global markets. The first wave of investments saw a total of eight ethane steam crackers and 13 PE plants slated for startup between 2017-19 along the USGC, with 2020 marking the beginning of a second wave that will bring more of both.

Overall, US PE capacity had risen 19.7% from the beginning of 2017 through the third quarter of this year, rising from around 20.3 million mt/year to around 24.4 million mt/year, according to the most recent American Chemistry Council data.

Recent weak domestic demand in the US has also been leading to more exports, sources have said, adding that ongoing US-China trade tensions have limited US producers' options for moving much of the new resin.

After the US imposed $250 billion in tariffs on a wide array of Chinese products, China countered in kind to the tune of $110 billion while including tariffs of 25% two PE grades that make up more than 90% of planned new US capacity.

The majority of the US production increases in the last two years have come from the two grades targeted by China's retaliatory tariffs, with US LLDPE capacity rising by 34.4% and HDPE capacity climbing 13.1% during that period, ACC data shows.

US-CHINA TRADE TENSIONS FELT

To that end, US exports of PE to China fell for a fourth straight month in October, totaling just 22,564.3 mt for a share of only 5.1% of all exports.

The US last sent this little in the way of PE volumes to China in September of last year, with exports at the time falling to 20,452.5 on the heels of Harvey making landfall in the US in late August 2017.

Other key export markets have filled the gap for the US, with Latin America, Vietnam, Europe and Canada serving as the primary "relief valves," sources say.

Those markets each saw an increase in cargoes sent from the US in October, with Latin America seeing the biggest increase in terms of volume. US exports of PE to Latin America totaled 192,073.4 mt in October, up 14.4% month on month and 40.5% year on year.

US exports to Vietnam rose to an all-time record high of 31,049.7 mt to open Q4, up 12.2% for the month and exponentially higher when compared with October of last year, when less than 700 mt was sent there.

US exports of PE to the 28-member European Union totaled 35,735.1 mt in October for its highest total since March 2016, when a little more than 36,000 mt was shipped. US exports to Europe were 17.7% higher month on month in October and 405.9% higher year on year.

PE exports to Canada came to 60,345 mt in October for its highest total in a year, with the month-on-month increase coming in at 11.9%.