North Texas polyethylene packaging projects delayed until 2018

Two North Texas joint ventures between resin packaging companies and railroads that aim to move some of the looming swell in US Gulf Coast polyethylene output to California for export have been delayed to 2018, the companies said.

Last year Katoen Natie, a global logistics and distribution company, and Packwell, a plastics bagging and logistics company with operations in Texas and Shanghai, announced plans to open resin packaging centers in North Texas in the second half of 2017, in conjunction with startups of 14 new polyethylene plants along the US Gulf Coast this year through 2019.

Those new centers at Union Pacific and BNSF Railway terminals are part of sharp growth in packaging capacity at Port Houston and others expecting a surge in polyethylene exports in conjunction with those startups.

However, neither will start up this year as originally planned.

Brandon Huynh, vice president of sales for Katoen Natie, said finalization of land and city agreements has taken longer than expected, so its center at Union Pacific's Dallas terminal is now targeted to start up in the third quarter next year rather than the same period this year.

Ross Selvaggi, executive vice president for Packwell, said his company delayed its plan to open a packaging center at BNSF's Alliance terminal near Fort Worth by a year to the fourth quarter of 2018 because of delays in some polyethylene startups.

Still, 57% of the nearly 6.7 million mt/year of new polyethylene capacity to start up through 2019 is slated to be operational by the end of 2017. Second and potential third waves are expected in 2020 and beyond.

Most if not all of that output destined to be everything from plastic bags and milk cartons to storage bins and toys will be exported. North America is already oversupplied with polyethylene, while demand Asia, Europe and Central and South America are growing, according to Platts Analytics.

The Houston region — mostly Port Houston — is expected to ship the vast majority of the new output, but industry players expect other ports to absorb some of that export growth. Other ports, such as New Orleans, Charleston and Savannah, are marketing themselves as alternatives to keep pellets moving when Port Houston — the second-largest petrochemical port in the world — faces hiccups like fog closures or inconsistent availability of empty containers to fill with export-bound resin.

That's where Katoen Natie, Packwell and their railroad partners see a niche.

Union Pacific’s Dallas terminal and BNSF’s Alliance terminal near Fort Worth are major receiving points for containerized Asian imports. Resin railed from the US Gulf Coast and then packaged at the terminals by Katoen Natie and Packwell can fill those empty containers, which the railroads move back to West Coast ports for export.