Petrochemicals:Global petchems market to peak in 2016

28 May 2012 00:00  [Source: ICB]

Global petrochemical profitability is poised to peak by 2016 as demand growth continues to outpace supply.

"We are in the midst of a multi-year uplift, with weighted average EBIT [earnings before interest and tax] for base chemicals and plastics expected to peak by 2016," said Mark Eramo, vice president of research and analysis at US-based consultancy IHS Chemical.

APIC 2012, Layna Lee

 Layna Lee

APIC attendees heard a positive outlook

Eramo was speaking at the 34th annual Asia Petrochemicals Industry Conference (APIC), held in Kuala Lumpur on May 17-18.

He estimated that profitability would average $200/tonne at the peak for base chemicals and plastics. Global demand is expected to expand at around 4.4%/year through 2020, he said.

The Middle East will remain the largest source of global supply and North America will also expand ethylene and derivatives capacity on the back of shale gas supply, he said.

Ethylene net equivalent exports from the Middle East are expected to rise from 12.1m tonnes in 2010 to 21m tonnes by 2020, while those from the US and Canada are projected to rise from 6.4m tonnes in 2010 to 10m tonnes by 2020, noted Eramo.

Asia Pacific will drive ethylene consumption, with demand projected to reach 75m tonnes by 2016 from around 60m tonnes in 2011, said the consultant. For North America, exports could represent 50% of future petrochemicals and polymers production, he said.

By: Joseph Chang
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