Stats: US PE exports hit a renewed record in 2023, sales to China boom

Statistics shows a new all time-high for US PE exports breaching the 13-million-ton threshold. Unlike previous years, when Central and South America were targeted as nearby destinations, the US strikingly boosted its PE exports to China in 2023. This is despite the fact that China continued to add a remarkable amount of new capacity last year.

In the past 20 years, the US has been ramping up its PE exports in line with the shale gas boom, which resulted in new PE capacities commissioned domestically particularly after 2010. From around a little more than 2 million tons of PE exports back in the days of early 2000s and around 3 million tons in 2010s, the US conducted 10 million tons of PE exports in 2020. Following a small slump in 2021, exports gained back momentum in 2022 with a 25% growth to hit back above the 10 million threshold. In 2023, there was a renewed record above 13 million tons in exports with a yearly increase of 21%.

A quick delve into partner countries: Exports to China more than doubled

Apparently, the US turned its focus mostly on China last year as it exported more than 2.5 million tons of PE, suggesting a whooping yearly increase of 118%. China formed 19% of the US’s overall PE exports, being the top destination and dethroning Mexico.

Mexico is dethroned

Traditionally, the main export destinations of US PE are Mexico, Brazil and Canada. In 2022, Mexico was the top buyer of American PE with a 17% share in overall exports, followed by China with 11% and Brazil with 9%. In 2023, Mexico’s share in US PE exports fell to 14% and Brazil to 8%, although export volumes to these countries still suggested yearly growths of 2% and 16% respectively.

How has the US boosted its exports to China despite China’s less dependence on imports?

China’s growing appetite for US PE needs more contextual understanding as its overall imports remained mostly the same from the previous year but imports from the US boomed. This was the second year in a row China raised its PE imports from the US regardless of the stalled growth in overall imports. Considering the fact that China commissioned around 5 million tons of PE in 2023, how come have US PE suppliers managed to gain increasingly more market share in China in the past few years?

Is it all because US PE has access to cost advantaged feedstocks?

Ethane crackers in the US continue to provide cost advantage to PE producers. According to EIA, 2023 ethane prices stood 50% below the 2022 average price and accordingly, ethylene prices were 30% lower, resulting in margin improvements for PE producers.

This helped regional sellers step-up exports aggressively and undercut competitors’ prices in export destinations, particularly in China, when domestic demand remained restrained amid rising interest rates. In a bid to avoid inventory built and margin erosion, producers also widely reduced operating rates across the US. In turn, exports formed more than 50% of all production this past year in the US.

Will US PE exports continue to grow?

Despite the cost advantage, the US may face more challenges to maintain export speed in the coming years. Domestic production is prone to expand further in 2024 as Shell, Bayport and Nova have all started up new PE plants in the past few months in North America. Dow is also readying to commission a new PE plant this year.

This comes at a time when global demand is far from a recovery as central banks are not hurrying to cut back interest rates. China is also faltering to maintain its growth amidst the property crisis. Plus, global PE supply far exceeds demand growth as new capacities are slated to be added in 2024, as well.

China is planning to bring 8 million tons of PE capacity online while India and Vietnam are also in the list to start up new plants, albeit not as big as in China.

All this means supply pressure will mount further on US PE producers, and competition to get market share in global markets will be stiffer than ever.