C2 surplus capacity to peak in 2011 - consultant

26 March 2008 23:35  [Source: ICIS news]

HOUSTON (ICIS news)--The global surplus of ethylene (C2) capacity will start to increase substantially in 2009 and peak at 11m tonnes/year in 2011, representing 8% of total demand, an industry consultant predicted on Wednesday.

“The high level of oversupply is forecast to be sustained near 8% through to 2012, suggesting the next downturn could be prolonged,” concluded Mark Eramo, CMAI executive vice president, olefins & derivatives.

The global operating rate for 2009 is forecast to fall below 90% and remain at a “depressed” level through to 2012.

Eramo told the audience at the CMAI World Petrochemical Conference that naphtha cracking cash margins could fall under extreme pressure assuming crude oil prices remain at historically high levels. Ethane cracking in North America would remain favourable assuming a favourable gas-to-crude ratio, he added.

Middle East regionally net exports of derivatives will increase dramatically over the next five years, pushing net equivalent trade volumes to nearly 20m tonnes. The product will be supplied to those areas that offer the most profitable net backs, Asia and Europe first but also other regions.

In the 2000-2012 period, Saudi Arabia and China will add the largest increments of capacity, about 14m tonnes/year each, noted Eramo.

However, in China, about 60% of the new capacity will be added from 2009 through to 2011.

“This level of steam capacity additions is unprecedented in China and their ability to execute will no doubt have an impact on the profile of the coming downturn,” he added.

For more on ethylene visit ICIS Chemical Intelligence

By: Peter Taffe
+44 20 8652 3214

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