INTERACTIVE: AFPM ’19: US ethylene market expected to remain long in 2019

HOUSTON (ICIS)–The US ethylene market is expected to remain lengthy through much of 2019 as production continues to outpace consumption, heading into this year’s International Petrochemical Conference (IPC).

Production has outpaced demand since mid-2018. Nearly 5m tonnes of new capacity, including new crackers and expansions to existing crackers, has started-up since late 2017. Since then, another two crackers have begun start-up or commissioning activities.

The new ethylene capacity has been more than enough to meet about 3.5m tonnes/year of new downstream polyethylene (PE) capacity which has started up since late 2017.

Spring turnarounds may begin to reduce some length in the market, but supply is expected to remain ample heading into the second half of the year when more crackers are scheduled to start up.

“With so much excess capacity, outages have not come into play in recent years,” a market source said.

New derivative units which started up in early 2019, including a Lotte ethylene glycol (EG) unit and a Sasol polyethylene (PE) unit, and delays to some new cracker projects, like the Sasol cracker in Louisiana, also may limit supply length.

However, the market is expected to be somewhat long until increasing derivative exports drive an increase in consumption levels and until the start-up of an ethylene export terminal scheduled in the fourth quarter.

Much of the new ethylene capacity in the US was planned alongside new PE capacity geared for exports.

While PE production and exports have grown, the trade war between the US and China has been a headwind. US PE exports are now targeting multiple smaller markets across Asia and into Europe, which increases costs.

Ethane costs, which spiked in 2018 and drove an increase ethylene prices, may be less volatile this year due to some infrastructure projects expected to be complete during 2019. Two pipeline projects and several fractionation projects are also scheduled.

Major US ethylene producers include Chevron Phillips Chemical, DowDuPont, ExxonMobil, INEOS Olefins & Polymers, LyondellBasell and Shell Chemical.

Hosted by the American Fuel & Petrochemical Manufacturers (AFPM), the IPC takes place on 24-26 March in San Antonio, Texas.

Focus article by Jessie Waldheim