Global Ethylene Markets Poised for Long-Term Growth

31 January 2000 00:00  [Source: ICB Americas]

By Don Richards

Global ethylene demand is projected to reach 136 million metric tons per year by 2010, an annual increase of 4.5 percent over 1999 levels of 90 million tons, with the Mideast and Asia being the strongest regions for growth.

That's the forecast of Bruce H. Pickover of Chem Systems, an IBM Company based in Tarrytown, N.Y. Dr. Pickover spoke last week before the company's annual meeting in Houston.

Polyethylene will remain the driving force behind ethylene consumption, accounting for about 61 percent of the market. Polyvinyl chloride provides 13 percent of ethylene demand, ethylene glycol is 8 percent, styrenics are 7 percent, and all other uses are 11 percent.

During the next five years, global ethylene capacity should reach 147 million annual tons. New projects in the Americas will total 5 million tons per year through 2005.

Those include Nova-Dow in Canada (1 million tons), BASF-Fina in the US (900,000 tons), Formosa in the US (815,000 tons), ExxonMobil-Pequiven in Venezuela (1 million tons), Rio Polimeros in Brazil (500,000 tons), and PBB of Argentina (450,000 tons).

Nearly 4.8 million tons will be added in Europe and the Mideast. In the Netherlands, Dow will increase its capacity by 600,000 tons. Saudi Arabia has four projects totaling 2.92 million tons. QGPC-Phillips in Qatar will bring on 500,000 tons, and Iran will add 520,000 tons.

In Asia, 4 million tons per year of capacity will be added, including 1.1 million tons at three Indian projects, 2 million tons in China, 800,000 tons by ExxonMobil in Singapore, 900,000 tons in Taiwan, 600,000 tons in the Philippines, and 600,000 tons at a Union Carbide-Petronas joint venture in Malaysia.

Despite such additions, Dr. Pickover expects operating rates for ethylene plants to rise to about 90 percent of capacity by 2002 or 2003. US ethylene demand will grow 3.2 percent annually and reach 62.9 billion pounds by 2005. By that time, domestic capacity will reach 64.2 billion pounds per year.

Equistar, Dow-Union Carbide and ExxonMobil will be the largest US ethylene producers. Phillips, Shell and BP Amoco will have the greatest exposure to the merchant market, and OxyVinyls, Solvay and Dow-UCC will be the largest ethylene purchasers.

Daniel Boivin, senior vice-president of Nova Chemicals, told the meeting that the Mideast has become the largest and most driven producer of ethylene because of its new world-scale crackers.

The average size of new steam crackers will rise from 250,000 metric tons per year in 1982 to 550,000 tons in 2002. In addition, Mr. Boivin cautions that the cash cost of producing ethylene in the US will be about 11 cents per pound this year, more than twice the Mideast's average of 5 cents.

He also predicts that cash costs for raw materials, which have driven methanol production to such distant locations as Chile, New Guinea and the Mideast, will eliminate all methanol production in the US within 10 years.

Nova is building a 2.8-billion-pound-per-year ethylene plant in Joffre, Alberta, due to start up next August. Mr. Boivin says the project will be the largest ethane-based cracker ever built. It will have seven 400-million-pound-per-year furnaces.

When the new plant is completed, the total ethylene capacity at the Joffre complex will reach 6.2 billion pounds per year, making it the world's largest single-site producer of the monomer.

The company is also building an 850-million-pound-per-year polyethylene unit, which Mr. Boivin calls the biggest single-train solution process plant of its type.Houston RoundupDOW LCH-8 EXPANSION: Dow Chemical Company has begun an expansion of its Light Hydrocarbon-8 facility at Freeport. The unit's ethylene capacity will be increased by 30 percent, to 2.1 billion pounds per year, and its propylene nameplate will rise to 1 billion pounds per year. The plant will be brought back on line in late February or early March.

The $100 million capital expansion project will be concomitant with a routine plant turnaround. To meet demand during the shutdown, the company will draw on hydrocarbon reserves from underground storage facilities.

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