Global polyolefins operating rates during the 1990s will remain less than 90% as manufacturers build capacity in traditional importing countries, Chem Systems Inc. predicts.
Resins and fabricated products markets will become extremely competitive, especially for companies that in the past have exported output to ease regional surpluses, the Tarrytown, N.Y., company says.
Capacity increases in developing Asian and Latin American countries will change trading patterns.
Meanwhile, environmental issues during the 1990s will move to the forefront for plastics industries in developed and developing nations.
Chem Systems reached those conclusions in a study of linear low density polyethylene (Lldpe), low density polyethylene (LDPE), high density polyethylene, and polypropylene markets.
MARKET TRANSFORMATION
In addition to environmental issues, Chem Systems says, export trade and technological improvements will alter polyolefins economics during the 1990s. Other significant polyolefins structural changes will flow from privatization of Latin America's petrochemical industry and the arrival of democracy in eastern Europe.
Chem Systems says export markets could be transformed into an arena served by integrated and externally supported companies. Technical and structural changes will produce conflicting results.
Technological improvements will result in modified, less costly manufacturing routes, encourage introduction of new products, and increase demand. Regional restructuring will create some opportunities, but increased interregional trade of products will reduce demand growth in target markets.
Some Asian and Latin American nations will develop competitive polymer positions superior to positions of developed regions, such as western Europe. However, low ethylene costs will continue to give an edge to Saudi Arabian and western Canadian manufacturers, Chem Systems says.
In many countries, LDPE has the most favorable market outlook among polyolefins.
LDPE capacity will increase to 17 million metric tons/year in 2000 from 14 million tons/year in 1990.
By contrast, Chem Systems expects Lldpe capacity to almost triple by 2000, increasing to nearly 17.5 million tons/year from 6.7 million tons/year in 1990.
Chem Systems points out that 3 years ago strong polyolefins demand and high prices in some regional markets prompted plants to operate at more than 100% of nameplate capacity.
In the past 2-1/2 years, manufacturers expanded capacity to 53.3 million tons/year from 45 million tons/year. As a result, supply outpaced demand and prices dropped, for Lldpe as much as 40% since the beginning of 1991.
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