News
23/12/25
Viewpoint: New PE capacity favorable to buyers in 2026
Viewpoint: New PE capacity favorable to buyers in 2026
Houston, 23 December (Argus) — With 2mn t/yr of new US polyethylene (PE)
capacity set to start up in the second half of 2026, pricing power may stay in
domestic buyers' hands for much of the year, particularly if producers struggle
to find homes for the new resin. Golden Triangle Polymers, a joint venture
between Chevron Phillips Chemical and QatarEnergy, is expected to start up 2mn
t/yr of high density polyethylene (HDPE) capacity in Orange, Texas, by the
middle of next year, aimed almost entirely at the export market. While the US
remains a low-cost producer, the new volume will have to compete with growing
global supply, including around 4mn t/yr of new PE capacity projected to start
up in Asia in 2026. With the key China market becoming more self-sufficient, it
may be difficult for the global market to absorb the new capacity. There are
some potential bright spots for US producers in the global market, including the
potential for a free-trade agreement with the EU, which would further open up EU
countries for more US volume. But if enough new export destinations are not
found, market participants have said material will back up in the US/Canada
domestic market, keeping supplies loose, and making it difficult for producers
to raise domestic contract prices. As new PE capacity has been added in the US,
the percentage of sales going to exports has continued to rise. In 2022 — prior
to the start-up of more than 3.3mn t/yr of new capacity from Shell, Baystar,
Nova and Dow that took place from 2023 through 2025 — total exports averaged
39pc of total sales, according to data from the American Chemistry Council
(ACC). In 2025, year-to-date through November, exports averaged 48pc of total
sales. New capacity is one factor that can cause export prices to decline, as
supplies increase in the market. As an example, Dow started up its new 600,000
t/yr HDPE/LLDPE swing unit in Freeport, Texas, in June 2025, with the full
ramp-up beginning in July. From July through 12 December, US LLDPE butene export
prices declined by around 18pc. Over the same period, US/Canada contract prices
held steady every month from July through November, with expectations that
December contracts also may settle flat as three US producers have not announced
an increase for the month. There were a variety of reasons for the flat contract
pricing in the second half of 2025, including weak domestic demand. But one main
factor was plentiful supply, and low export prices, as US/Canada producers
fought for market share in the global market. "[The US] is so over-supplied,"
said one US PE buyer. "The economic factors are in the buyers' favor right now."
For January, most US/Canada producers have announced price increases of between
5-7¢/lb. Suppliers are expected to push hard for a price increase in January,
with many market participants expecting some level of a price increase to stick
in the first quarter. But with little expectation for improved demand in 2026,
buyers, distributors and traders said they expect the market to remain
well-supplied, which will make it difficult for further contract increases. "I
think we will continue in a buyers' market for a couple more years," said one US
trader. Producers are wary about global oversupply, but believe there will be
some additional capacity rationalization in other regions that will help create
more export opportunities. Geopolitical events such as the Ukraine-Russia
conflict, Venezuela embargoes, trade tariffs, and anti-dumping duties have
contributed as well to a volatile market for finished goods that could also
limit demand growth next year. Low ethane/ethylene prices also contribute to
lower PE prices but this downward trend is expected to change as US olefins
exports increase in 2026, resulting in a more balanced supply/demand market. By
Michelle Klump Send comments and request more information at
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