US ethylene to benefit long term from naphtha-linked pricing: exec

13 November 2013 21:47  [Source: ICIS news]

CEDAR BAYOU, Texas (ICIS)--Global ethylene prices will remain linked to the chemical’s production from naphtha cracking in the coming years and thus will give US ethane crackers a stable advantage across the world, an executive with Chevron Phillips Chemical (CP Chem) said on Wednesday.

CP Chem is one of many companies moving to take advantage of the shale gas revolution in the US with its building of a world-scale 1.5m tonne/year ethane cracker at Cedar Bayou near Houston, expanding of its Sweeny, Texas, ethane cracker by 200m lbs/year and the building of two polyethylene (PE) plants in Sweeny, each with a capacity of 500,000 tonnes/year.

With all of the announced projects by CP Chem and other companies, the US is set to substantially increase its production capacity in the next several years. But CP Chem does not worry at the moment that a glut of ethylene in the US will evolve, said Ron Corn, vice president of corporate planning and development for the company.

“I think it’s quite possible that, when you look at the announcements to date, that there’s more announcements for ethylene capacity than derivative capacity,” said Corn, who made his comments at a roundtable event hosted by CP Chem. “You could speculate that what that would lead to is a little bit lower ethylene price, but I think that would provide a signal to the derivatives to expand.”

US producers of ethane-based ethylene and its derivatives will find their product to be sought-after globally due to many other regions still producing ethylene from higher-priced naphtha, Corn said.

“Ultimately, all of these markets – whether you’re talking polyethylene, vinyl or glycol – are really kind of global markets, and global pricing is going to be set generally by naphtha crackers. That’s still about 50% of the capacity of the world,” he said.

Corn added: “We do feel that the US will develop the ability to export and will be a very competitive export platform.”

By: Jeremy Pafford
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