23 September 2013 23:09 [Source: ICIS news]
NEW YORK (ICIS)--Actual global ethylene supply growth could be as much as 19.4m tonnes/year below consensus estimates, resulting in a cycle peak in 2016 that could last for multiple years, one analyst said on Monday.
“Using our supply growth estimates and IMF’s global GDP growth forecast, we contend a peak in the cycle could arrive as early as 2016,” said Hassan Ahmed, an analyst with investment research firm Alembic Global Advisors. “Additionally, the peak could be a multi-year one buoyed by increased outages in the ?xml:namespace>
“We also believe the
The analyst triangulated global ethylene supply addition data on a project-by-project basis using ICIS, IHS and industry trade journals as sources to arrive at his projections, which are 19.4m tonnes/year less than the consensus growth of 50m tonnes/year by 2017.
For the Middle East, the analyst takes down his 2013-2017 supply growth estimates by 6.1m tonnes/year relative to the consensus from a combination of reduced operating rates in
Ahmed calls the arrival of a wave of North American ethylene capacity in 2017 a “pipe dream”.
“Environmental clearances are taking as much as 12-18 months to be granted, with plant construction taking as much as four years thereafter, assuming a normal EPC market,” said Ahmed.
“There is a case to be made that construction could actually take longer as the EPC market gets capacity constrained on the back of heightened plant build-out activity,” he added.
In the analyst’s base case North American supply model, he is “conservatively factoring in four of the seven mega projects that consensus is modelling being fully operational in 2017 actually starting up by H2 2017, with the capacity increment split evenly between 2017 and 2018”.
In Asia, excluding
Meanwhile, in Latin America, he expects that the Ethylene XXI cracker under construction in
“Our view of an imminent peak in the commodity chemical cycle is primarily predicated on what we consider to be a capacity addition vacuum arising between 2013 and 2017 as Middle Eastern producers exit the capacity addition game and US capacity additions are still years out,” Ahmed said.
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