08 January 2014 11:32 [Source: ICIS news]
By Pearl Bantillo
SINGAPORE (ICIS)--Asia may remain beset with ethylene overcapacity for years, with new supply coming from a host of ongoing petrochemical projects within the region, as well as from those in the US that were propelled by the shale gas boom.
“This is a challenging time for the region," ExxonMobil Chemical president Stephen Pryor told ICIS.
"There is an overhang of ethylene capacity. It is a global challenge, but it is a particular challenge in Asia with all the capacities that have been built,” he said.
Against this backdrop, petrochemical players must strive to have feedstock advantage, advanced manufacturing process and come up with new products, the ExxonMobil Chemical executive said.
“Asia remains at the bottom of the cycle. We'll be in a challenging environment for a while and the extent to which the shale phenomenon [in the US] will add to that challenge - that's a fact of life too,” he added.
But the long-term fundamentals of the region remains strong, he said, citing that the next decade would see global demand for chemicals growing by 50%.
“Two-thirds of it [demand growth] will be out here in this region,” Pryor said.
ExxonMobil held an opening ceremony for the expansion of its Singapore Chemical Plant on 8 January that is expected to produce more than 2.5m tonnes of new derivative products.
Central to the expansion is a new 1m tonne/year steam cracker that can process a wide range of feedstocks - from light gases to crude.
“Some of the products are going outside of the region. [For] the specialty elastomers, this is going to be our worldwide supply point, supply the whole world from there [Singapore],” Pryor said.
ExxonMobil built a 300,000 tonne/year specialty elastomers unit as part of the expansion of its Singapore Chemical Plant.
Pryor described 2013 as “not a bad year” for chemicals, hoping that this year would turn out to be better.
Asia will continue to be the main growth driver.
“The reality is the US from a chemical standpoint is a very mature market. We have some demand growth domestically in the US but it's a percent or two, it's not strong demand growth,” Pryor said, adding that polyethylene (PE) hardly grew in the US in a decade.
“That is not going to change,” he said.
The shale gas revolution has unleashed a flurry of petrochemical projects in the US as it presented feedstock cost advantage.
“The [US] domestic market is what is it and therefore, part of these products, I would argue, most of these products will have to be exported,” he said.
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