09 May 2013 07:33 [Source: ICIS news]
TAIPEI (ICIS)--Global ethylene capacity is expected to expand by around 41% between 2015 and 2025, leading to a new era of overcapacity, an executive for consultancy firm Nexant said on Thursday.
According to Andrew Lee Fagg, a principle at Nexant Asia, global ethylene capacity is projected to increase by 68m/tonnes year over the period, from 164m tonnes/year in 2015 to 232m tonnes/year by 2025.
“We will see close to 70m tonnes of new ethylene capacity to come on during this period. The market probably only needs 50-55m tonnes, but we’re probably going to see over-build again in the market,” he said.
Addressing attendees at the Asia Petrochemical Industry Conference (APIC) in Taipei, Taiwan on Thursday, Fagg attributed the projected growth in capacity in part to shale gas, with 13-18% of capacity additions to take place in the US, with the bulk of the remaining capacity to come from Asia and the Middle East, according to Nexant data.
“At the base case, we’re looking at around 13% of the total [coming from the US], which seems quite small overall, so we’re still going to rely heavily on investments largely in the Middle East and also in Asia to really plug the total market needs for ethylene.
“And even in the high case, we’re only looking at around 18% contribution from the US, so it seems fairly moderate overall in terms of the wider picture,” he added.
Fagg predicted that projected wellhead prices for North American gas would be around $4/million British thermal units (MMBtu), compared to $10/MMBtu in Europe and $15/MMBtu in Asia.
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