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.

Price trends:

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.

During 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

Source: Fibre2Fashion study

Source: Fibre2Fashion study

Future Market:

Rigorous capacity expansion of ethylene and downstream products in China and Middle East are likely to create a drastic impact in the global ethylene market. Middle East countries show much increase in the production of ethylene and demand. Based on the volume of production and sales that happened in the past 8 years, analysts predict that the figures will double by 2015, and by 2017 ethylene capacities will increase by 20 million tons.

Asia Pacific region is expected to dominate the future market for ethylene, generating more than one third of the global demand. Increasing production of textile fibres in Asia will fuel the market for ethylene. China will become the world's biggest consumer of ethylene, pushing US to the second place, trailed closely by Saudi Arabia.

Ethylene is the one of the largest volume commodity chemicals used directly as a raw material by diverse companies. With a firm support of energy market, the price of Ethylene is expected to uphold the current level in near future, due to optimistic outlook in the short run.