Global polyethylene oversupply and the price will be suppressed in 2020

According to the Global Petrochemical News Network in Houston on November 20, 2019, the ethane feedstock brought by the U.S. natural gas shale boom has provided polyethylene producers with a key supply cost advantage, leading to an infrastructure revival, turning the United States into a global polyethylene supplier, and increasingly focusing on Asia, the world's largest polyethylene demand center.

However, with the construction of the first batch of new U.S. crackers and polyethylene plants coming to an end, the global polyethylene market will face oversupply and price pressure in 2020, and polyethylene demand for the entire year is expected to lag.

Asia and Europe also face similar challenges: Against the background of continued uncertainties brought about by the slowdown in global economic growth, the global market has ample resin supply.

In the first round of entrepreneurship in 2017-2019, 13 new polyethylene plants will increase annual polyethylene production capacity in North America by 35% to more than 27 million tons. The 15 polyethylene plants planned to start in the 2020s will increase the total annual polyethylene production capacity in North America by 26% to 33.35 million tons.

Prices are showing pressure from an oversupply of polyethylene. By early November this year, the price of high-density polyethylene blow molding products had fallen by 43% since mid-March last year to $782 FAS Houston per ton. During this period, linear low-density polyethylene fell 41% to $772/ton FAS Houston, while low-density polyethylene fell 37% to $871/ton FAS Houston.

At least one new polyethylene plant will be put into production in early 2020. This new polyethylene plant is Lyon Dessell's 550,000 tons/year high-density polyethylene plant located next to the Houston waterway. The new polyethylene plant was originally scheduled to start production in the middle of this year. However, market participants expect that price pressure from oversupply will delay the new polyethylene plant's operation until 2020.

A polyethylene trader said: "We believe that polyethylene prices will not rise by the first quarter of next year. Globally, polyethylene supply is already very abundant."