As Shale Gas Re-Shores Plastics, Are Belts About to Tighten?

genarex Blog

Source: Plastics News – Koch Industries makes a big bet on shale gas: $2.1 billion bid for PetroLogistics
It is abundantly clear that the boom of shale gas production in the Americas has created a huge stream of new opportunity within the plastics space for domestic producers. Ten years ago, domestic producers were at a major competitive disadvantage for net costs on raw materials produced on older machinery with more expensive overhead compared to newer construction in (predominately) Asia. Now, the dramatic reduction in natural gas and other extractables has brought US petrochemical manufacturing back into the limelight.

Nothing highlights the excitement around this new growth more than Koch Industries making a $2.1 billion acquisition of the propylene supplier PetroLogistics LP. This represents a significant growth opportunity for Flint Hills Resources LLC, a domestic producer of polypropylene.

How will this affect the competitive landscape of the olefins market in the US? This acquisition gives Flint Hills access to the plant space formerly owned by ExxonMobil, and likely puts them in the driver’s seat to seek out positions as a low-cost producer of polypropylene. In fact, Jan Schut produced an outstanding article detailing precisely how the US can position itself to be the lowest cost provider of PP in the world. (PlasticsEngineeringBlog.com – How Shale Gas Is Changing Propylene).

As costs lower, so too will pricing, as combatants in the space seek to win market share. We can help you stave off competitive threats and retain your margins as prices drop. Genarex is pleased to offer BYLOX, a plant based bio-additive, which serves as a low-cost additive for a number of different functions in polyolefins, PVC, and PLA, including improvements in ductility, flow, and certain barrier properties.