APLA ’09: Global ethylene surplus seen in coming years

10 November 2009 20:53  [Source: ICIS news]

MEXICO CITY (ICIS news)--Increased ethylene capacity in Asia and in the Middle East will create a global surplus of 10-15% in the coming years, putting pressure on ethylene prices, a Brazilian executive said on Tuesday.

Ethylene capacity in those regions began expanding in 2007 and will have increased by 26.5m tonnes/year in 2011, said Grupo Ultra president Pedro Wongtschowski during a presentation at the 29th Latin American Petrochemical Association (APLA) annual meeting in Mexico.

Wongtschowski said increased capacity in Asia would keep that region from absorbing excess production from the Middle East, leaving producers in that area searching for alternative markets.

And that could include Latin America, he told delegates.

The producer said the US is expected to remain competitive due to the cost advantages that natural gas has over liquid feedstocks.

The US could also consider exporting product to Latin America, which relies mostly on liquid feeds and is a convenient market, he said.

Natural gas availability in the Middle East is expected to decrease in the coming years, Wongtschowski said, which should erase part of the advantage it has over other regions.

That should benefit producers in areas like Latin America, he said.

Nonetheless, the short-term outlook for the industry is challenging, Wongtschowski said, citing a significant gain in global capacity combined with a drop in demand and a weaker economy.

The producer expected the commodities market to recover slowly and the petrochemicals industry to face increasing sustainability challenges in the long term.

Grupo Ultra is major shareholder in Brazil’s Ultrapar Participacoes, which operates in fuel distribution, petrochemicals production and liquefied petroleum gas (LPG) storage and distribution.

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By: William Lemos
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