by guest contributor Paul Hodges
Shale gas developments in the US have sparked a wave of euphoria about the opportunity for a renaissance of its domestic manufacturing base. Petrochemicals should be one of the main beneficiaries, as the ethane produced from shale gas discoveries now provides the US with some of the cheapest feedstock in the world.
Major producers including Dow Chemicals, Shell and Chevron Phillips have already announced plans to build new ethane-based capacity. Others are likely to join them. Current estimates suggest total US ethylene capacity could therefore increase by 25 to 30 percent from today’s 27 million tonnes.
However, one key factor has the potential to spoil the story – much of this new capacity will need to be exported in the form of polyethylene (PE) and other major plastics. Yet as the chart shows, based on data from Global Trade Information Services, US net PE exports have actually been declining since 2010, even though its cost advantage from shale gas was increasing.