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Volatile energy prices against a backdrop of rising oil prices will conspire to keep polymer prices high in 2007. Despite the fact that oil prices have been hovering at levels of US$60 for the first two months of 2007, several factors will aid in keeping polymer prices at higher levels:
China 's phenomenal economic growth has led to almost 10% growth of polymer consumption. Since China needs to import a significant proportion - over 30%, it has become the most important and influential player globally. The second key factor shaping the polymer industry is the global price of crude oil, which is likely to remain strong in 2007.
The potential for global high demand for polyethylene (PE) in 2007 is very strong. Asia in general is expected to be the region of highest demand growth between now and 2015. This will put a positive pressure on the price of PE. All the PEs will tend to remain higher during 2007. Demand for LDPE, due to no new capacity addition and higher capacity utilization is likely to remain strongest. Expectation of stronger ethylene price in 2007, will definitely increase the prices of all types of PE in 2007.
The global demand of PP reached an estimated 65 million tons in 2005, a demand that will show no sign of abating in 2006 and 2007, with operating rates projected to be at 90%. The global demand for PP will grow by about 6% in the next year. New capacity in PP during 2007 is not likely to take place because of delay in implementation of newer projects in the Middle Eastern region.
PVC will also suffer due to rising energy cost. While North America is expected to slow down or even show a negative growth, the Asian region, particularly China and India will compensate the negative growth with higher growth in the demand.
The cost of polystyrene (PS), is heavily influenced by the monomers used to produce it. The price of styrene should move up and down with that of its feedstock/raw materials - benzene, ethylene, crude oil and natural gas. Rising styrene prices are pushing up derivative prices. Currently, there is an overcapacity of styrene, and demand is slow. China has good growth prospect of PS for 2007. Overall PS would also not escape the higher cost of feedstocks.
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