The above chart is a real labour of love by ICIS’ Sue Royse. It comes from the indispensable monthly ICIS Worldwide Ethylene Plant Report. This tracks global operating capacity (except Russia/CIS), and details both planned and unplanned shutdowns. It highlights a number of key issues:
• Total nameplate capacity was basically flat during 2008 at c10500kt/month. It began to rise sharply at the end of 2009, and is now at 12000kt/month. ICIS currently expect it to increase to 13000kt/month by the end of 2012.
• This is a c25% capacity increase. Yet demand historically increases in line with global GDP. So even if we return to Boom period growth of c4% (most unlikely in the blog’s view), operating rates will remain well below those 2003-7 levels.
The chart also further explodes the myth that new Middle East/Asian plants have had major delays in starting-up. It is unclear where this myth began, but it seems to have been fed by wildly optimistic expectations in the financial community about the time taken to actually build new cracker complexes.
The chart shows scheduled maintenance as blue columns, and unscheduled as yellow column. The latter rose to historical highs in Q4 2008- Q1 2009, during the great destocking period. But since then, the combined total has reverted to its historical 7% level (left column), in line with the industry norm that maximum operating rates are c93% of nameplate capacity.