29 February 2012 16:32 [Source: ICIS news]
BRUSSELS (ICIS)--The European ethylene market shows unexpected resilience, despite recent capacity additions and feedstock advantages in other regions, because of it potential for demand growth, particularly in eastern Europe, and price gains in co-products, said Thys Siermann, business director of olefins at Dow Europe on Wednesday.
He was speaking at the 7th World ICIS Olefins conference in ?xml:namespace>
Siermann said that while there has been tremendous growth in capacity additions in the
He also said that supply of competitively priced ethane feedstock for crackers in the Middle East is also being exhausted, which necessitates more mixed feed usage and is therefore not as attractive in Europe as previously thought. As a result, Siermann said that the Middle East capacity threat to
Contrary to expectations, European ethylene demand has not been adversely affected by the recent capacity expansions and resulting increased derivative supply in the Middle East, as
While the shale gas boom in the US provides low-cost olefin production, it is not seen to be sufficient to allow for exports outside of the Americas. And while there are some completive shale gas feedstock reserves in Europe to be explored, this is not likely to be any short-to-medium term solution, because of the need for further development.
In addition, European ethylene demand continues to grow, with eastern Europe showing the strongest growth potential for plastics consumption, provided “we survive the 2012 economic doldrums,” added Siermann.
Although European crackers are largely reliant on higher-priced naphtha than more competitively priced ethane, European cracker operators are compensating to some extent with the higher costs by increasing prices for co-products, such as the C4s and propylene, which form part of the overall cracker economics.
The rise in price for cracker co-products is attributed to the fact that more competitively priced feedstocks such as ethane are being used to feed global ethylene demand at the expense of co-product supply.
Siermann said that while European crackers continue to hold their own against new capacity and feedstock advantages, some regional regulations such as Reach (The registration, evaluation and authorisation of chemicals) among others, which have not been enforced globally, could impact European competitiveness.
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