Review of the Global Ethylene Industry and Future Prospects (2019–2023)

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Review of the Global Ethylene Industry and Future Prospects (2019–2023) Author/Source: Yaha Coal Chemicals Date: 18-01-2019 Clicks: 91. The 2019 China Olefin Feedstock Diversification Forum will be held in Beihai, Guangxi from March 27–28, and industrial site visits will be arranged as part of the event. Leadership experts from the Petrochemical Research Institute of China National Petroleum Corporation will attend the conference and present an analysis on \"The Global Olefins Industry Landscape and Competitiveness.\" Global ethylene production capacity will continue to grow; it is estimated that an additional 38 million tons of capacity will be added between 2019 and 2023, bringing the total capacity to 215 million tons by 2023, with an average annual growth rate of 4%. In the coming years, the ethylene industry in countries and regions such as the United States, the Middle East, Southeast Asia, and China will experience new momentum for growth. The global oil and gas industry is experiencing a full recovery, and after several years of stagnation, project cancellations, and delays, investment in the petrochemical sector is set to see new growth. The areas where petrochemical projects are active are mainly in Asia-Pacific, the Middle East, and the United States. By 2050, the majority of demand growth in the global petrochemical industry will occur in the Middle East and China, and as a result, most new projects will be built there. In the United States, thanks to the ongoing success of the shale gas revolution, enthusiasm for investing in petrochemical projects remains high; while these products meet domestic demand, they are primarily aimed at overseas markets. As a fundamental raw material in the petrochemical industry, ethylene directly contributes to and drives the development of industries such as plastic processing, rubber manufacturing, construction materials production, chemical machinery fabrication, engineering construction, transportation, and the food service sector; it plays a crucial role in the economic and social welfare of countries around the world. By the end of 2017, global ethylene production capacity was approximately 170 million tons, an increase of 5.14 million tons or 3% compared to 2016. In 2017, China added 4 new projects, resulting in a total ethylene production capacity of 1.2 million tons ； India adds 1 new ethylene project with a production capacity of 1.5 million tons ； There are 4 new and expanded ethylene projects in the United States, resulting in an additional ethylene production capacity of 2.44 million tons. Geographically, North America and the Asia-Pacific region are the largest producers of ethylene in the world; together, they accounted for 56% of the global ethylene production capacity in 2017. Capacity growth in the Middle East was rapid, with its share rising from 10% in 2005 to 21% in 2017. The adjustment in Europe’s ethylene industry has come to an end, with production capacity dropping from 23% in 2005 to 14% by 2017. The total ethylene production capacity of the world’s top 10 ethylene-producing countries and regions accounts for 68.5% of global capacity, an increase of 0.6% compared to 2016. The United States remains the world’s largest producer of ethylene. By the end of 2017, the United States had an ethylene production capacity of 31.886 million tons, accounting for 18.7% of the world’s total ethylene production capacity. China and Saudi Arabia ranked second and third respectively, accounting for 13.8% and 9.2%. From the producers’ perspective, the total capacity of the world’s top 10 ethylene producers in 2017 was 94.3 million tons per year, accounting for 55% of the global total capacity. Since the merger between Dow Chemical and DuPont in the second half of 2017, the new company DowDuPont has a total global ethylene production capacity of 15.22 million tons, making it the largest ethylene producer with an 8.9% market share. ExxonMobil and Saudi Basic Industries follow closely behind, with the combined capacity of these three companies accounting for 26.4% of the world’s total capacity. From the perspective of raw materials, the proportion of ethane is increasing year by year on a global scale. In 2017, ethane accounted for 38%, while naphtha feed accounted for 42%. In 2017, 69% of ethylene produced in the United States was manufactured using ethane as a raw material, 21% was produced from LPG, 7% used naphtha and gas oil as feedstocks, and the remainder was produced from gasoline. Globally, the share of the naphtha route will gradually decline, expected to drop to 40% by 2025. The role of ethane in the ethylene production process will further increase, reaching around 42% by 2025. Global ethylene production capacity will continue to grow; it is estimated that an additional 38 million tons of capacity will be added between 2019 and 2023, bringing the total capacity to 215 million tons by 2023, with an average annual growth rate of 4%. In the coming years, the ethylene industry in countries and regions such as the United States, the Middle East, Southeast Asia, and China will experience new momentum for growth. Ethylene is the main means of realizing the benefits of the shale gas boom in the United States, and the next 5 years will still see a peak in capacity expansion. According to statistics from Yaha Consulting, between 2019 and 2023, the United States will see an increase in ethylene production capacity of around 12 million tons, with a compound annual growth rate of 6.1%. The downstream products associated with the new ethylene project are mainly polyethylene, with some ethylene glycol also planned. The United States will become a significant net exporter of polyethylene and ethylene glycol, putting pressure on the international supply and demand balance for these substances. Regions such as India and the Middle East, which are part of the Belt and Road Initiative, will continue to promote the development of the ethylene industry. ——Benefiting from rapid economic development and the impetus of the ‘Make in India’ and ‘Clean India’ initiatives, India’s chemical industry continues to grow at a fast pace ； ——The Middle East is striving to expand its downstream asset portfolio in order to reduce its reliance on crude oil exports through diversification; in 2018, Abu Dhabi, Qatar, Saudi Arabia and other countries announced new petrochemical project plans ； ——Southeast Asia is also making significant efforts to promote the growth of the petrochemical industry; in particular, Indonesia, Thailand, and Singapore have set clear goals and are working hard to achieve them. China is the driving force behind the growth of the chemical industry worldwide and in Asia, and the development of the ethylene industry is set to experience remarkable progress in the future. Between 2019 and 2023, China will add approximately 18 million tons of ethylene production capacity, with an average annual growth rate of 11%. The optimization of raw material structures, diversification of manufacturing processes, industrialization of advanced technologies, diversification of market participants, and the advancement of downstream products will further intensify. China’s economic development has entered a \"new normal\" of medium-to-high growth, but demand will continue to rise steadily. It is estimated that the deficit in ethylene equivalent in 2023 will exceed 20 million tons, meaning that large quantities of monomers and derivatives will still need to be imported. Under the new circumstances, how does ethylene, polyethylene, and other downstream products from the United States that reach China’s coastal areas compete with olefins produced through domestic routes in China? What opportunities and challenges do global trade frictions present for the petrochemical and olefin industries? How will large-scale projects for producing olefins from naphtha, CTO/MTO, PDH, and ethane cracking by state-owned enterprises, private companies, and multinational giants develop? How will new technologies such as the direct conversion of crude oil into olefins, natural gas into olefins, syngas into olefins, and the next generation of coal-based olefin production methods compete in the future?