Surplus supply: Large volumes of Middle Eastern ethylene derivatives will flood the East Asian market

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Supply exceeds demand: Large amounts of ethylene derivatives from the Middle East will flood the East Asian market. Source: China Adhesives Network. According to reports from various media outlets, industry experts predict that there will be an oversupply of ethylene globally in the coming years. Despite a 5% annual increase in demand for ethylene, the world will still face a situation of surplus by 2015. In East Asia, by 2010 the growth rate of ethylene production will exceed that of demand, resulting in a supply surplus. This situation will persist until 2013, during which time the average operating rate of ethylene cracking units in this region (excluding China) will remain at a low level of 75% to 85%. According to statistics, the global demand for ethylene in 2008 was 110 million tons, a 2.8% decrease compared to 2007. On the production side, although some new facilities are under construction or being expanded, some ethylene projects have been delayed or canceled. By 2015, global ethylene production capacity is expected to reach 160 million tons per year, which is 1.6 times that of 2008. Among them, the ethylene production capacity in the Middle East will increase to 32.6 million tons per year, which is 2.7 times the 12.7 million tons in 2008. China’s ethylene production capacity will reach 21 million tons per year, compared to 10 million tons in 2008. During this period, a large volume of low-cost ethylene derivative products from the Middle East will flood the market; it is estimated that by 2015, there will be more than 8 million tons of ethylene equivalent added, which is more than Japan’s annual production volume. Between 2009 and 2012, a large number of new ethylene production facilities and those with expanded capacity will come online in the Middle East and China. If the downward trend in demand is not reversed, many ethylene plants in East Asia will face reduced production or even shutdowns in the future. Due to an oversupply of ethylene globally, a large volume of ethylene derivatives produced in the Middle East will flood into the East Asian market, resulting in an excess supply of ethylene. It is predicted that the production capacity of ethylene derivatives in the Middle East will increase by 180 million tons per year. Of this, 170 million tons per year of production capacity will be allocated for export, with about half of the output going to East Asia. If the ethylene production capacity in the Middle East and China operates at full capacity, the ethylene cracking units in other regions of East Asia will inevitably be forced to reduce production. It is expected that by 2014, production of these **devices will decline at a double-digit rate, with the decline rate exceeding 20% between 2010 and 2012. Meanwhile, exports of polyethylene and ethylene glycol in the Middle East are also set to increase significantly. Among them, polyethylene exports are set to increase by 100 million tons per year, while ethylene glycol exports will increase by 46 million tons per year. As a result, the operating rate of polyethylene plants in Asia will drop to around 70%, and the operating rate of ethylene glycol plants will also decrease significantly.