NPRA '07: Shell expects flat ethylene demand

25 March 2007 22:28  [Source: ICIS news]

SAN ANTONIO (ICIS news)--Shell Chemical expects ethylene demand in North America to remain essentially flat over the next five years with operating rates dropping to the mid-to-high 80s, its general manager for higher olefins & derivates, Robert Chouffot, said on Sunday.

Despite the lower operating rate, there had been expressions of interest for the Puerto Rico refinery which supplies heavy feedstock for Shell’s ethylene units, he said, but added that the group was at the very early stages of any possible divestment process.

He had more to say about ethylene demand, however.

“We see [ethylene] growth aligning with GDP (gross domestic product) globally with growth in North America a little lower,” he said on the sidelines of the 32nd NPRA International Petrochemical Conference. “We see demand essentially flat over the next five years.”  

Shell’s view matches that of numerous commentators, who see average ethylene demand growth in North America declining as derivatives growth is fed increasingly by imports, largely from new Middle East capacities.

“We see export growth diminishing and demand growth satisfied from elsewhere,” Chouffot said.

For the past two years, ethylene and derivatives growth has been over 4% globally, he added. Shell’s US cracker operating rates currently are in the low 90s.

The ethylene picture in North America looks a little better than at the end of last year, Chouffot, said with high inventories having been worked out of the system and less concern over the US housing market.

Shell’s strategy in chemicals in North America will continue to be focused on “strengthening the heartlands,” he added.

The market will remain competitive and the focus for Shell will be on issues such as reliability and safety, he suggested.

Chouffot said Shell continued to build on upstream integration in chemicals and on synergies with with its refineries.

By: Nigel Davis
+44 20 8652 3214

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