LyondellBasell raises estimate for world cracker run rates

HOUSTON (ICIS)–LyondellBasell raised its forecast for the operating rates of the world’s crackers, because of the plants will be down longer than expected and because new capacity will be delayed, the Dutch producer said on Tuesday.

Due to delays and cancellations, LyondellBasell has lowered its forecast for global ethylene capacity in 2018, said CEO Bob Patel. He made his comments during an earnings conference call.

LyondellBasell’s forecast for global ethylene production is now down by 6bn lb (2.7m tonnes) from its earlier estimate, Patel said.

In addition, the company also raised its estimate of planned and unplanned downtime for the world’s crackers. It now expects 6% of global ethylene capacity will be down in 2018, compared with an earlier assumption of 4%.

LyondellBasell raised its downtime estimate after it conducted its own review of planned and unplanned outages. This showed that during 2012-2015, slightly more than 6% of global ethylene capacity was down.

Meanwhile, the company expects that global demand will continue growing for polyethylene (PE) and polypropylene (PP), the main end markets for ethylene and propylene.

Demand for PE and PP rises with population and wealth, Patel said. 

Like other polyolefins producers, LyondellBasell expects plastic consumption will continue to grow in China, India and other emerging markets as their populations adopt middle-class buying habits.

With that, PE and PP demand should continue growing at 4-5%, similar to its rate in the past 25 years, Patel said.

Given LyondellBasell’s new outlooks for ethylene demand and production, it raised its forecasts for global operating rates.

The new forecast shows a shallower trough in 2018 and a steeper rise in the subsequent years. By about 2020, operating rates should break 95%.

When operating rates reach 95% and above, this signifies that ethylene markets are generally tight, Patel said. Rates of 90-94% indicate a balanced market.

“The view of the next several years is indicating better operating rates and conditions than what we had planned earlier,” he said.

INSET IMAGE: Plant in Channelview, Texas, at night. (LyondellBasell)