EIA Weekly Nat Gas Storage Update
EIA Weekly Nat Gas Storage Update
Tom Pawlicki
- Energy
Bi-Weekly Plastics Report - May13, 2026
By: Alex Hodes, Energy Analyst - KC Energy
Polyethylene (PE)
- U.S. polyethylene moved 30cpp higher in April but markets are now softening a bit. Current forecasts are for a flat market in April-June.
- Feedstock prices in natural gas and ethane have been depressed but additional ethane export capacity along with LNG capacity could be supportive.
Supply
The supply side remains constructive for North American PE producers. March production hit a record 5.91 billion pounds with operating rates reaching 98% and estimates are that rates were at 99% in April.
Days of inventory remain historically tight. PE inventories fell to 40.6 days in March — below both the trailing 12-month and 24-month averages — and are forecast to decline below 40 days through May as export demand continues pulling material out of the region.
Planned outages remain minimal through Q2, allowing producers to maximize production during the current margin environment. Effective operating rates are expected to remain elevated near 99% through May and June. Globally, the market remains structurally tight but production in the U.S. is expected to remain strong.
Demand
Domestic PE demand in North America remains robust, though signs of demand destruction are beginning to emerge internationally, specifically in Asia. March domestic PE demand reached a record 3.24 billion pounds, while exports surged to 2.68 billion pounds. Total PE sales were the second highest on record.
Export demand continues to be the major driver. Global buyers in Europe and LatAm look to the U.S. to replace product from Asia. However, buyers globally are beginning to push back against elevated prices. Asian-origin cargoes — particularly from mainland China — have increasingly appeared into Latin America and Europe at discounts of $200–400/mt below U.S. offers. This has slowed transaction activity and caused some exporters to offer discounts late in April.
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Data Source: American Chemistry Council, Chemical Market Analytics by OPIS *Forecasts shaded in yellow
Data Source: American Chemistry Council, Chemical Market Analytics by OPIS *Forecasts shaded in yellow
Feedstocks
Lower ethane and natural gas price led to lower ethylene costs but supplies of ethylene are still structurally tight. PE margins have increased substantially and feedstocks have stabilized somewhat. Natural gas prices have remained depressed due to the excess production in the U.S., however, with new LNG capacity online, a growth in data center demand, and speculative length at a low point we believe that natural gas prices are closer to a bottom than a top.
Price Outlook
PE contract prices were up 30cpp in April after the 10cpp increase in March. Current forecasts are for pricing to stabilize for the next several months. However, if the Strait of Hormuz remains closed we could see potential damage to more pololefins productive infrastructure in the Middle East. The Strait closure will continue to tighten things the longer it happens. Expect prices to reaccelerate if feedstock prices push higher in the Fall.
Polypropylene (PP)
- Polypropylene prices moved up 19.5cpp in April but are expected to move sideways in May. The market has turned from very long to now a structurally short one.
- Polymer-grade-propylene (PGP) prices have settled somewhat, but supplies are still very tight. PGP availability is a constraint moving forward which would be supportive of PP prices.
Supply
PP supply has shifted from structurally long to tight under current conditions. North American operating rates are expected to average 87–89% through Q2, with effective operating rates nearing 100% in April as producers try to take advantage of the current pricing environment.
Days of inventory fell to 34.9 days in April and remain well below historical norms as producers maximize operating rates to capture elevated margins and meet export demand.
Middle Eastern disruptions continue to heavily impact global PP trade flows. PP exports from the region are currently estimated at only about one-quarter of normal flows, and Middle Eastern producers remain constrained by logistics bottlenecks and feedstock shortages tied to the Strait of Hormuz closure.
Demand
Domestic PP demand in North America remains relatively healthy, particularly in packaging and food-related applications. March domestic demand increased 12.3% month-over-month, while exports surged 54% as global buyers turned to North America to replace missing Middle Eastern supply.
Export demand remains the key driver of pricing and margin expansion. Europe and Latin America continue pulling significant North American volumes. There are some signs that some buyers are resisting due to the elevated prices, and we could see more demand destruction if prices continue to move higher.
Data Source: American Chemistry Council, Chemical Market Analytics by OPIS *Forecasts shaded in yellow
Data Source: American Chemistry Council, Chemical Market Analytics by OPIS *Forecasts shaded in yellow
Feedstocks
Polymer-grade-propylene (PGP) has been a key driver of the PP marker as PDH units in China turn down. PGP prices are down from their peak in early April, but still are very elevated from earlier this year - around 49cpp as compared to 29cpp to start the year. U.S. PDH margins are elevated and will drive more PGP production but the weak margins in China have reduced production substantially globally.
Price Outlook
PP prices likely peaked in April, according to current estimates, but are expected to remain elevated throughout Q2. Chemical Market Analytics forecasts modest declines beginning in May as propylene prices soften and Asian competition pressures global pricing. Current forecasts call for PP contract prices to decline roughly 2cpp in May followed by further easing into Q3. The U.S. will continue to export barrels to try and fill the gap and an extension of the conflict should prevent the market from selling off aggressively.
- Energy
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