Our forecasts look further into the future to examine new ethylene production and its impact on global trade.
The ethylene market is undergoing a period of intense evolution and our unique long-term analysis has identified new production from gas-based feedstocks as being increasingly important.
Current economics favour converting ethane, rather than high-cost naphtha, to ethylene. Over the next 15 years, this will have huge benefits for the Middle East and North America, which is experiencing a surge of ethane from shale gas.
During the same forecast period, we predict global ethylene demand growth will average 3.3% per year, with China at the helm.
So how will these changes affect profitability going forward?
In the near-term, margins for traditional naphtha-based producers will improve with slightly higher global operating rates.
However, downward pressure will be applied when large amounts of new capacity start up in 2018-2020 in North America, the Middle East and Russia and The Caspian.
The impact will be felt hardest by existing naphtha-based producers as most new projects will have a competitive feedstock advantage.
As a result, operators in the Middle East and North America will enjoy a consistently stronger position, while naphtha-cracking in Europe and Asia will continue to be affected by cyclical margin patterns.
With such significant changes occurring within the industry, far-reaching and long-term analysis has never been more essential to making informed investment decisions.
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