What’s in store for global polyethylene and polypropylene out to 2027?

Worldwide polyethylene capacity is seen to grow from 108.3 million mt in 2016 to 150 million mt by 2027, with around 10 million mt of speculative capacity included into our forecasts post 2024. Platts Analytics expects production to grow from 93 million mt in 2016 to 133.6 million mt by 2027.

Global operating rates are expected to average 85.3% in that time period. However, during the period of excessive capacity additions led by the US, China and Iran between 2017 and 2023, rates are expected to average just below 83%, dropping to as low as 81.9% in 2020 to balance the market.

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infographic global trade flows polymers 08 2017 small

The decline in operating rates during the period of heavy investments could potentially be countered by rationalization in high-cost production centers to boost global runs.

Meanwhile, global polypropylene markets are expected to tighten post-2021 and speculative additions will be needed post-2024 for market to maintain balance.

We expect PP capacity to increase from 76.6 million mt in 2016 to 89 million mt by 2023, when demand will outstrip supply given the lack of additional planned capacity.

As a result, a gradual speculative capacity of about 9.8 million mt will be needed by 2027 to balance the market at an optimal operating rate of around 88%.

Global demand for PP is expected to average annually at around 3% for the next ten years.

Source: www.platts.com

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