Commentary: Formosa Plastics' new US cracker piles on the ethylene capacity

05 March 2012 00:00  [Source: ICB]

As expected, yet another US ethylene cracker based on cheap feedstocks from the local shale gas boom is officially under way.

Formosa Plastics USA is the latest to announce a major expansion, unveiling its plan to build an 800,000 tonne/year cracker along with a 300,000 tonne/year linear low density polyethylene (LLDPE) plant and a 600,000 tonne/year propane dehydrogenation (PDH) plant to produce propylene. The $1.7bn (€1.3bn) project is expected to come on line in 2016 - the earliest completion date, as the rest of the field have given dates of 2016-2017 or 2017.

The addition of this new cracker will bring the total announced ethylene capacity expansions in the US to 27% of existing capacity by 2017. Five world-scale crackers could come on line in the same short period. And if one more world-scale cracker is added, that figure could rise to a stunning 32%.

The other petrochemical players considering world-scale crackers in the US include Brazil's Braskem, Saudia Arabia's SABIC, US-based Occidental Petroleum, as well as US start-up company Aither Chemicals.

While not all of these considerations will result in new crackers, there is already plenty on the table to trigger a supply-driven downturn in 2017.

By: Joseph Chang
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