Global ethylene downturn seen 2009-2011 – BofA

29 February 2008 17:54  [Source: ICIS news]

HOUSTON (ICIS news)--Ethylene prices will enter a cyclical downturn from 2009 through 2011, according to Banc of America analysts on Friday.

“Global ethylene demand growth of 3.9% outpaced capacity growth of 3.2% in 2007, but we see 2008 as a transition year, with capacity expected to increase 4%, while demand growth slows to 3.2%,” according to a research bulletin.

The chemical sector equity research analysis team led by Kevin McCarthy said global ethylene capacity delays will not stop prices from falling, based on forecasted aggregate capacity growth of 22-23%, which is nearly twice the bank’s demand forecast of 12-13% over the same three-year period.

“We know of no project cancellations at this time, although capital cost inflation has caused delays in some cases,” the report said.

Exports from the US have risen due to a weaker US dollar, helping to keep operating rates healthy, the report said. However, underlying demand is sluggish enough to affect ethylene contract prices in February.

“As a result, the February ethylene contract price could decline for the first time in 13 months,” the report said.

For more on ethylene visit ICIS chemical intelligence

By: John Waggoner
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly