09 November 2009 17:58 [Source: ICIS news]
MEXICO CITY (ICIS news)--The US will need to trim its olefins capacity by at least 10% in 2010 to help reverse the weak economics in the sector, a consultant said on Monday.
“It won’t solve the competitiveness issue, but it is a start,” the source said on the sidelines of the 29th Latin American Petrochemical Association (APLA) annual meeting in Mexico.
The shutdowns would likely involve old liquid crackers, the consultant said, adding that US crackers will continue to rely on ethane as their primary feedstock.
Crude oil will break $100/bbl next year, but ethane will remain a competitive feed, the consultant predicted.
“Ethane will be king in the coming years,” the source said
US olefins producers will have to decide between putting money into crackers to make them more flexible or shut them down altogether.
“It will depend on what type of supply contract is involved, and it is not a simple decision to make,” the source said.
The continued lightening of US crackers would tighten output of heavier co-products such as aromatics, and that could be a profitable proposition for an olefins producer that decides to continue to crack liquid feeds.
“A well-run [liquid] cracker could do very well in that scenario,” the source said.
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