By John Richardson
ONE of the golden rules of petrochemicals is "always run hard if you have the feedstock advantage". As a result, the US is said to have been a little frustrated by a series of operating problems that have constrained their average capacity utilisation to around 80% in 2012.
"If they had been able to they would have run at close to 100% and exported their downstream polyethylene (PE) surpluses to first of all South America and then Asia," said a source with a global polyolefin producer.
"This would have been at the expense of the South Koreans who have increasingly targeted South America in order to compensate for a very weak China."
Next year, therefore, the source worries about the US running flat out because of the huge shale gas-derived feedstock advantage. The States is the second most competitive region in the world behind the Middle East.
Add this to estimates that the US will add around 1m tonne/year of ethylene, and with it derivatives, through capacity creep by 2014 and you have a very bleak outlook for the Northeast Asians, given that the prospects for China remain bearish. As the slide above shows, the US is scheduled to eventually add 10m tonnes/year of ethylene.
"My customers in China have absolutely no confidence about 2013. They are predicting GDP (gross domestic product) growth of just 5-7%," added the source, mirroring comments made by another industry player last week.
"I think there might be a recovery in H2 of next year, depending on the politics, but I've pretty much written-off the first half."
