Ethylene is a key ingredient to polyethylene which is mostly used in textiles. Primary derivatives of this upstream petrochemical include polyethylene (PE), polyethylene terephthalate (PET), polyvinyl chloride (PVC), polystyrene (PS), and a range of other products. Imbalance in demand and supply in the petrochemical business is an ongoing challenge for all industry players. When there is an imbalance in demand or supply, it results in product shortages affecting profitability in various places of the end use chain. Variations in economic growth of a country, new plant startups, volatility of the feedstock and energy markets, performance of the existing plants, and a few of the key variables influencing market conditions for the product. They are difficult to predict, but have a significant impact on the performance of the companies.
Starting from 1995, throughout 2008, market capacity of ethylene in the Middle East was more than 13 million ton. The Government's efforts to minimize the dependence of the exports of crude oil, and starting up of petrochemical industries maximized the returns, and diversified the industrial base.
2008, ethylene sales reached its peak of more than USD 160 billion. Despite the
decline in sales during the following year, prices of ethylene are predicted by
industry analysts to reach the same record level during 2017. After a fall in
2009 by an average of 35%, prices recovered steadily during 2010, giving hint
for a dynamic development in the global ethylene market. There was an
oversupply of ethylene with its surplus capacity reaching 15 million tons. The
cash margin for some segments in the market was not as expected.
Source: Fibre2Fashion study