Market outlook: Ethylene supply to be dominated by conventional route

Cuckoo James

15-May-2015

The supply of ethylene in the global market will be primarily driven by conventional stream cracking output through to 2020 despite the rapid emergence of new feedstock sources, an industry analyst said on 8 May.

 

Steam crackers will increase

Copyright: Shell

More than 95% of global ethylene supply through to the end of this decade will be steam cracker-based, Paul Ray, ICIS’ head of consulting and analytics, told attendees at the Asia Petrochemical Industry Conference (APIC) in Seoul, South Korea.

The fastest growth in ethylene production other than from stream cracking will come from the methanol to olefin/coal to olefin (MTO/CTO) route in China, he said.

However, MTO/CTO prospects in the future may be at risk on the back of the drop in crude oil prices from either the narrower spread between coal and oil or lack of imported methanol feedstock as US-based methanol capacity expansions have been cancelled or delayed, Ray said.

“Some of the existing plans for new MTO/CTO in China are experiencing some slippage after the current big wave of additions, so very likely there is going to be a long pause before any new large-scale investment because the cost curve has been compressed,” he added.

REVOLUTION
The shale gas revolution in North America could be a serious threat to Asian petrochemical players that are heavily reliant on naphtha feedstock, the chairman of the Petrochemical Industry of Taiwan (PIAT) said on 8 May.

The surge in ethane and propane feedstocks from North America is expected to dramatically reduce production costs of ethylene and propylene, Bao-Lang Chen told delegates at the Asia Petrochemical Industry Association conference (APIC) in Seoul, South Korea.

These products could likely overtake the market of naphtha-based ones in Asia, he said.

“We have noticed that lots of Asian petrochemical producers have been planning to import ethane and propane from the US and Canada to substitute naphtha,” Chen said.

However, the decision to shift feedstocks is a hard one to make, he said.

“The use of lighter hydrocarbons for cracking produces ethylene at a much lower cost. However, it would also result in a shortage of propylene, butadiene and aromatics,” Chen added.

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