The US is building on its cost advantages in ethane feedstock with the development of shale gas reserves promising to lead to a revival in investment in cracker capacity over the next 5-7 years, according to BMI's latest US Petrochemicals Report. In Q1-11, sales and captive use of major plastic resins totaled 18.45 bln lbs, up 2.7% year-on-year (y-o-y). Production of major plastic resins totaled 18.41 bln lbs, an increase of 1.2% y-o-y, implying a net import requirement of 40 mln lbs. The most dynamic segment was PVC, with sales growing by 6.2% to 3.58 mln lbs, leading to 6.3% growth in output to 3.52 mln lbs. LLDPE and LDPE saw divergent trends in sales, with growth of 1.2% and -1.3% y-o-y to 3.39 bln lbs and 1.71 bln lbs respectively, leading to output growth of 0.3% and 3.5% y-o-y to 3.48 bln lbs and 1.77 bln lbs. LLDPE benefited from the competitiveness of US PE output in Asian markets. LLDPE output has been highly robust and resilient to the recession due to its increased use in a broader range of packaging applications, largely at the expense of LDPE. The PS segment saw a stronger recovery from a lacklustre year in 2010 with Q111 sales growing 15.0% y-o-y to 1.38 bln lbs and output growing 8.6% to 1.39 bln lbs. While HDPE sales were robust with growth of 6.1% to 4.38 bln lbs, output grew just 0.5% to 4.25 bln lbs, meaning that demand growth largely benefited imports. The worst performing segment was PP, with sales down 4.1% to 4.01 bln lbs and production falling 4.8% to 4.0 bln lbs. After a period of stagnation and decline, the improved cost position of US petrochemicals bolstered by shale gas discoveries has prompted a flurry of interest in new cracker capacity. Growth in ethane availability paves the way for a potential cracker in the northeast, where the Marcellus shale reserves could support a world-scale plant, in addition to those recently announced by CP Chem and Dow Chemical. Bayer recently announced it is considering selling or leasing its property in West Virginia to develop an ethane cracker using ethane feedstock from Marcellus. CP Chem is considering a 1 mln tpa cracker at a Gulf Coast site by 2016-17. Formosa Chemical is evaluating plans to boost ethylene capacity at its Point Comfort, TX facility by about 450,000 tpa, probably in 2015. Westlake Chemical says it will expand ethane-based ethylene capacity at Lake Charles, LA by 105,000-110,000 tpa by end- 2012. A second Lake Charles expansion will be completed by the end of 2014, although the size of the expansion was not disclosed. Cracker restarts include a 225,000 tpa ethylene plant at Eastman Chemical's Longview, TX site. Dow's olefins expansion plan also includes the addition of 2.3 mln tpa ethylene capacity through the restarting of its St .Charles complex at Hahnville, LA plant by end-2012, improving or increasing feedstock flexibility at its Plaquemine, LA and Freeport sites by 2014, debottlenecking its Channelview and LaPorte, TX crackers and by building a world-scale ethylene plant on the US Gulf Coast by 2017.