US ethylene growth spurs new plastics export routes

Rapidly growing U.S. ethylene production and investment in new derivative capacity has increased the number of ports exporting plastics and opened new markets for U.S. producers, ClipperData told Petrochemical Update.

Exports are critical in the over supplied US plastics markets and new capacity is changing trade trends, including who is selling and who is buying. Image Credit: Port of Houston

Exports are now critical in the oversupplied U.S. plastics market and will become even more significant in the next few years as additional capacity comes online.

ClipperData uses Customs and Border Protection cargo-level data to gauge the growth of the plastics export market and track its evolving trends.

North American polyethylene (PE) production, in particular, is expected to increase to more than 54 billion pounds by 2020, up from about 44 billion pounds in 2015 as supply grows faster than domestic demand, according to Petrochemical Update’s U.S. Polyethylene Export report released in May 2017. 

U.S. PE production will exceed domestic demand, adding up to 6-9 billion pounds of excess inventory for export through 2020, according to the report.

Plastic exports growing

The total of all plastics exported from the U.S. in 2017 was 5.03m tonnes, down 12% from 2016, but up 18% from 2015, according to the Customs documents accessed by ClipperData.

The decline in exports in 2017 from 2016 could be due to extensive outages following Hurricane Harvey and outages related to expansions in the works at the time.

For 2015, the total of all water-borne plastics exports from the U.S. was 4.25m tonnes.

By 2016, 3 million tonnes of new PE and cracker capacity was added in North America, following the first part of the petrochemical construction boom nicknamed the ‘first wave.’

The total of all plastics exported by vessel in 2016 from the U.S. rose by 31% from a year earlier to 5.73m tonnes. 

New importers developing

Latin America and Mexico can’t handle all the extra resin, so additional export destinations have now opened in Europe, Asia and the Caribbean.

Brazil, Colombia, and China are the top export destinations from 2015 to year-to-date 2018, with Chile, Peru, Argentina, Italy and Spain also taking in a large share of U.S. product, according to ClipperData.


Image: Clipper Data Analysis

In 2013, for example the top destinations for U.S. HDPE were Mexico, Canada and Brazil, together taking 62% of exports for the year. At that time, U.S. HDPE exports were 1.75m tonnes, according to U.S. Customs Border Patrol (CBP) cargo documentation.

US HDPE exports to Mexico fell to 7,967 tonnes in 2017, a 71% decline over 2016 and a 76% decline over 2015.  

The decline of U.S. exports to Mexico is a result of the start-up of Braskem Idesa's Ethylene XXI joint venture cracker and PE project in Veracruz, Mexico.

The PE complex started operations in late 2016 and began selling product in 2017. The PE complex is a joint venture between Braskem and Grupo Idesa.

The greatest growth markets for consuming U.S. plastics look like they will be the Middle East, China, Korea, Brazil and Europe, according to ClipperData. Although looming trade wars could impact this analysis.

HDPE market share

High Density Polyethylene (HDPE) has the greatest market share, accounting for 72% of plastic exports in the U.S. in 2017 when compared with Linear Low Density Polyethylene, Low Density Polyethylene, Polypropylene Copolymer and Polypropylene Homopolymer.

Linear low density PE (LLDPE) has also been on the rise since the petrochemical construction renaissance in North America begun. There were 689,719 tonnes of LLDPE exported from the US in 2017, up 25% from 2016 and 78% higher than the 387,791 tonnes exported in 2015. 

Much of the LLDPE produced around the world is used with LDPE or replaces LDPE in film and packaging. As more people buy goods online via mail order, the demand for packaging and shipping material increases.

Announcements at the start of 2018 are focused on polypropylene (PP) with ExxonMobil and Canada Kuwait Petrochemical designing major PP facilities, and Braksem and Inter Pipeline currently building major PP facilities. These facilities will likely begin exporting PP in or just after 2021. 


Image: Clipper Data Analysis

Largest exporting ports

With $129 billion in shipments, Texas is the largest chemical producing state and Louisiana, with $51 billion in shipments, is the 4th largest chemical producing state, according to the ACC.

Most of the major ethylene crackers coming online or already producing are in the U.S. Gulf.

With these figures in mind, it is no surprise that Texas remains the largest exporter, accounting for 89% of total U.S. resins exports in 2016 and 82% in 2017.

Louisiana and California are the next two biggest exporters of U.S. plastics.

While Louisiana was the second largest exporter in 2015 and 2016, California has moved into the second largest exporter spot in 2017 and year to date 2018, sending more resins from the U.S. than Louisiana.

Total resin exports from California climbed to 367,103 tonnes in 2017, up 252% from 2015. The top destinations for product from California are Korea, China, Hong Kong, Japan and Taiwan. 

Images: Clipper Data Analysis

More ports taking market share

Meanwhile, concerns about container availability and vessel size, rail, truck, and capacity have caused exporters to look for some other options outside of the U.S. Gulf, just in case. 

Some of the viable export options so far, which are also seeing significant growth since the construction boom began, include Charleston, Savannah, and New York/New Jersey.

The Port of Charleston got a head start on the game servicing its first railcar from the U.S. Gulf in 2011 and then began making efforts to grow and support this business.

The Port of Charleston is now servicing 17 import and export plastic resin companies and has eight bagging and transloading facilities. 

Some of the smaller ports in the U.S. Gulf are seeing substantial increases in volume as well. 

Georgia exported 6,243 tonnes of material in 2015, but moved up to 23,165 tonnes in 2017.

Florida exported 1,118 tonnes of material in 2015, but 21,912 tonnes in 2017.

Virginia saw a similar story, exporting 7,876 tonnes of resin in 2015, but 29,883 tonnes in 2017.

Even as several new ethylene and derivative units have begun operations in 2017 and the first half of 2018, construction of several new projects are planned to begin this year. 

Additional projects are expected to break ground in 2019 and 2020, with most of this new capacity coming online around 2023.

By Heather Doyle