31 March 2011 23:03 [Source: ICIS news]
HOUSTON (ICIS)--Global polyolefin operating rates will be depressed in 2011 as demand growth is unlikely to be sufficient to offset capacity additions that are due to come on stream in the Middle East and Asia, US consultancy Nexant said on Thursday.
High crude oil prices, sustained by political turmoil in north Africa and the Middle East, are also "putting pressure on polyolefin and pricing arrangements", Nexant said in a publicly distributed summary of its annual industry report.
The summary did not give specific forecasts for operating rates or prices.
It predicted that demand for high density polyethylene (HDPE) film and pipe grades will continue to grow strongly, following a gain of 8.7% in 2010.
In contrast, demand for polypropylene (PP) - up 5.6% - has lagged, "due to its close links with the automotive industry, whose recovery has been sluggish", Nexant said.
The Middle East's emergence as a major global supplier of polyolefins will develop further, after its share of global capacity rose to 14% in 2010 from 6% in 2000.
Its exports will rise 50% between 2015 and 2025 as Asia pulls in more product and western Europe remains an importer, the summary said.
"Although North America is currently a strong exporter, its position will switch to net import by 2018 as consumption outstrips capacity addition," Nexant said.
Other significant industry factors going forward are the "fragile state" of economic recovery in the US and Europe, the withdrawal of government subsidies, and the struggling state of the housing and automobile industries in many countries, Nexant said.
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