Ethylene op rates to fall, Asia hardest hit – analyst

21 March 2007 23:00  [Source: ICIS news]

HOUSTON (ICIS news)--Operating rates at ethylene plants worldwide were expected to turn lower from 2009 due to oversupply, with those in Asia being the hardest hit, an industry consultant said on Wednesday.

"Nameplate operating rates begin to fall starting in 2009 and drop below 88% starting in 2010/2011," Mark Eramo, vice president, olefins and elastomers, for CMAI said at the consultancy's conference.

"A global nameplate operating rate of below 88% is weak from a historical perspective and is the basis for a margin forecast that shows the return of the next period starting in 2009," he added.

The rates were expected to be sustained at or above 90% through 2008 in a reflection of near term market strength. When the downturn does arrive, operating rates at Asian plants are expected to be the hardest hit., he said.

Average operating rates in Asia are forecast to fall below 90% on average, which would be "a first time event" for the entire region, he added. Asia has embarked on adding a significant amount of new capacity at the same time as the Middle East.

"This will place extra pressure within the region as market players begin competing for market share," Eramo said.

Additionally, Asia is a primary target market for Middle Eaat producers of polyethylene and ethylene glycol.

As the next wave of Middle East capacity comes on stream, trade flows from the Middle East to Asia, especially China, are expected to increase greatly, he added.

By: Abdul Hadhi
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