Estimated growth in PE and PP to support prices

07-Jul-06

After a brief respite, commodity resin prices continued to march northwards in USA. Prices of various grades of HDPE, LDPE and LLDPE continue to rise since May, coupled by further price hike announcements for June. Robust seasonal demand and inventory restocking by processors has led to an increase in Q2 demand -estimated to be up 2-3%. Overall demand in 2006 is estimated to grow by 6-8%. No major capacity addition is scheduled for ethylene or polyethylene, keeping supply short of demand. Huntsman's ethylene cracker in Port Arthur, Texas, which accounts for 2% of domestic ethylene supply, could be out of operation for at least 6 months after a major fire in April. Polypropylene prices were also on the way up for two consecutive months, attributed to continued escalation of energy, transportation, and feedstock costs, along with improved demand. Demand for Q2 is estimated to be up by 3-4% as against a 2% increase in Q1 demand.