27 March 2008 22:35 [Source: ICIS news]
HOUSTON (ICIS news)--The global excess of polyethylene (PE) capacity could reach unprecedented levels, exceeding 10m tonnes/year by 2009 to peak at nearly 14m tonnes/year in 2011, a consultant said on Thursday.
“Operating rates should fall to the low to mid 80% level in 2009 and 2010 as the global market goes long on supply,” said Nick Vafiadis, business director of polyolefins for Chemical Market Associates Inc (CMAI).
Vafiadis was talking to the World Petrochemical Conference, sponsored by CMAI.
Most of the new PE capacity will be in the Middle East or Asia. Much less is anticipated in North America and Europe.
Middle Eastern capacity coming on stream in 2008-2012 includes 3.37m tonnes/year of low density PE (LDPE), 3.4m tonnes/year of linear low density PE (LLDPE) and 6.5m tonnes/year of high density PE (HDPE), Vafiadis said.
Much of this capacity is anticipated to come on line in 2008, he said.
The Middle East will be competitive enough to ship product around the world. Middle Eastern PE exports will grow from 2.8m tonnes in 2007 to 11.5m tonnes in 2012.
Vafiadis expects net imports into Europe to triple from 700,000 tonnes in 2007 to 2.2m tonnes in 2012. Chinese imports will double to 6.2m tonnes in the same period. North America will remain a slight net exporter in 2012.
In addition, a wide array of finished products will be produced in the Middle East and exported to outside the region.
Vafiadis said that Chinese dependence on PE resin imports will decline in terms of total demand.
CMAI forecasts that 6.1m tonnes/year of capacity will be brought on stream in China in 2009-2012, with nearly 3.3m tonnes/year in 2009 alone.
By 2012, Chinese producers could provide nearly 60% of domestic PE resin requirements compared with 40% early in this decade.
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