01 April 2011 17:41 [Source: ICIS news]
By Joseph Chang
NEW YORK (ICIS)--In the first of what is believed to be a wave of new investment in North American petrochemical capacity, Chevron Phillips Chemical has unveiled plans for a worldscale grassroots ethylene cracker in the US to take advantage of abundant supplies of shale gas.
Recognise this as a watershed event. This has been the first announcement of a cracker in the US in about a decade, as the entire industry took a solemn vow to never again build in the country after the severe downturn of 2001–2002.
The last decade has seen unprecedented volatility in the price of natural gas – the key feedstock for the ?xml:namespace>
Upward price pressures across a wide spectrum of commodities were a major theme at the event – from ethylene to naphtha cracker co-products propylene and butadiene, to short-term shortages in cumene, and subsequently downstream products phenol/acetone.
In the medium term, supply constraints are poised to emerge in monoethylene glycol (MEG) and methyl di-p-phenylene isocyanate (MDI). Titanium dioxide (TiO2) has been as tight as a drum and producers are banging the skins for further price increases.
The announcement of a new
For long-time industry players and observers, this should have a familiar ring. While not every cycle is the same, there are repetitive elements. The build-up of capacity in what are indisputably favourable conditions is one key element.
Does the planned cracker, which is only at feasibility study-stage, signal the end of the upcycle? Not necessarily. But keep an eye on other announcements – whether grassroots capacity or other major expansions.
The global petrochemical industry, in the next two-to-three years, should enjoy the sweet spot of the cycle. No-one wants to leave the party early. But recognise the seeds of the downturn that are already being sown.
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