This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Platts Report: Increased U.S. Propylene Supply Still Won't Meet Global Shortfall

Stocks in this article: MHFI

LONDON, Aug. 13, 2014 /PRNewswire/ -- U.S. propylene supplies are expected to return to levels not seen since 2006, but the increase in the feedstock supply won't come close to meeting the global demand for polypropylene during the next decade, according to the just-released quarterly: Platts Global Polyolefins Outlook.

Polypropylene, commonly known as PP or polypropene, is a plastic that has the widest variety of applications, including packaging, automotive components, stationary, furniture, reusable containers, disposable cutlery, toys, textiles, domestic appliance and banknotes. The price movements of PP resins directly impact raw material costs for the makers of "everyday items." 

"Shale gas exploration has given the U.S. an opportunity to enter the on-purpose propylene market in a big way," said Jim Foster, editorial director of petrochemical analysis at Platts. "While much of the propane dehydrogenation (PDH) announcements were designed to offset the lost propylene production from refineries and crackers that have switched to the lighter ethane feedstock, we will face a potential oversupply of propylene in the near future."

However, the oversupply will eventually be absorbed by increasing global demand for PP. Globally, it's estimated there is a need for nearly 18 million metric tons (mt) of new PP capacity by 2024, according to the Platts report. Most of the demand will be created in China, and much of the new PP production capacity is expected to be built in Asia. Producers in China have announced plans to add more than 3 million mt per year of PP capacity on-stream.

At the same time, there are 16 PDH plants being planned in China, which would produce more than eight million mt of the feedstock propylene annually. Of these, eight have already announced they will be using propane sourced from the U.S.

"The U.S. is positioned to capitalize on the PP shortages in two ways," said Foster. "U.S.-produced plastic, made from inexpensive shale-based propane, can be exported globally. Or, if other regions – particularly Asia – prefer to produce domestically, U.S.-produced Natural Gas Liquids (NGLs) will be exported to feed those units."

Details of the development in the propylene and PP markets can be found in this factsheet, which is a snippet of the 98-page Platts Global Polyolefins Outlook report that also covers the ethylene and polyethylene markets.

The Platts Global Polyolefins Outlook, previously known as the Platts Shale to Polyethylene Report, is a quarterly report available by subscription. The detailed analysis of global petrochemical markets includes a summary of findings; comprehensive region-by-region data on ethylene and polyethylene production, supply and demand, cracker projects, plant capacity and trade flows; as well as 10-year price forecasts from Bentek Energy, an oil and natural gas analytics and forecasting unit of Platts, for crude oil and five natural gas liquids (NGLs): ethane, butane, isobutane, propane and natural gasoline.

Each quarter's report will feature updated content, data forecasts and commentary from Platts petrochemicals analysts Hetain Mistry, Max Yong and Jim Foster. The next Platts Global Polyolefins Outlook is scheduled to be released in September 2014.

Monthly information on the spot physical market prices of olefins and aromatics, the building blocks to polyethylene, polypropylene and other plastics, synthetics and rubbers, is available via the Platts Global Petrochemicals Index (PGPI) press release.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,461.32 -153.49 -0.92%
S&P 500 1,927.11 -14.17 -0.73%
NASDAQ 4,382.8470 -36.6310 -0.83%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs