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Worldwide ethylene capacity to witness glut
Apr '09
It is reported that market participants expect the world's ethylene production will face a surplus situation within the next few years and although demand for ethylene will grow at an annual average of 5 percent, ethylene will remain in oversupply state till 2015.

In East Asian region, growth rate of ethylene production will be greater than demand by 2010, resulting in excess supply. This situation will continue until 2013 with ethylene crackers maintaining an average operating rate of 75-85 percent in this region (excluding China),

Between 2009 and 2012, the Middle East and China will have in place a large volume of new ethylene production capacity expansions and if fundamentals do not change, it may also lead to suspension of operations in many existing ethylene capacities.

According to statistics, total global ethylene demand was 110 million tons in 2008, representing a 2.8 percent reduction from 2007. Global ethylene production capacity is expected to reach 160 million tons per year by 2015, 1.6 times that of 2008.

Among them, ethylene production capacity in the Middle East will increase to 32.6 million tons, 2.7 times that of 12.7 million tons of 2008. China's ethylene production capacity will reach to 21 million tons per year against 10 million tons in 2008.

As a result of oversupply ethylene in the world, ethylene derivatives produced in the Middle East will flood into markets in East Asia, resulting in an oversupply state of ethylene.

It is predicted that production capacity of ethylene derivatives in the Middle East will increase 180 million tons per year, of which 170 million tons will be exported and about half of this production will be exported to East Asia.

If ethylene production capacity in the Middle East and China run at full operational capacity, crackers in other countries will inevitably be forced to cut production. Plants in these countries will need to cut rate in double-digits in 2014; especially the cut rate will exceed 20 percent from 2010 to 2012.

Fibre2fashion News Desk - China

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