Rapid capacity expansion in the Middle East to exert considerable influence on China’s ethylene market

Before 2009, the global ethylene capacity had mostly been concentrated in developed countries such the United States and European countries, while recent years have seen soaring capacity in Asia and the Middle East. As per a report by ResearchInChina, in 2009 and 2010, the newly-increased capacity in Asia was 1.8 mln tons and 7.29 mln tons respectively, while they were 5.22 mln tons and 1.6 mln tons in the Middle East. The rapid capacity expansion in the Middle East will exert considerable influence on China’s ethylene market. In 2009, the global ethylene capacity reached 137 mln tons, and it is expected to realize 145 mln tons in 2010. In 2009, the global ethylene consumption touched 111 mln tons. It is expected that ethylene demand will increase by over 3% to more than 114 mln tons in 2010. By region, the demand growth is limited in the mature markets of developed counties; Asia has become the major contributor to the robust demand growth, and will account for 60% of the global demand surge in the upcoming 5 years, and half of the Asian demand growth will come from China. In 2009, China’s ethylene equivalent consumption reached 24 mln tons, while its ethylene output was no more than 10.7 mln tons in the same year, bringing the self-sufficiency rate below 50%. To turn things for the better, China has built a number of new ethylene facilities in recent years. In 2009 and 2010, the newly-increased ethylene capacity reached 1.8 mln tons and 3.25 mln tons respectively. The ethylene industry in China features high regional concentration, with major manufacturing bases concentrated in provinces and municipalities such as Guangdong and Shanghai. In 2008, Guangdong accounted for 20% of the total output of ethylene, and major manufacturers include Maoming Petrochemical and CNOOC & Shell Petrochemicals Company Limited; Shanghai accounted for 17.7%, and leading manufacturers include Sinopec Shanghai Petrochemical Company Limited and Shanghai SECCO Petrochemical Company Limited. New ethylene facilities are generally closed to oil fields or in the regions where the petrochemical industry is relatively mature. Typical enterprises include PetroChina Dushanzi, Sinopec Zhenhai Refining & Chemical Company, Sinopec Tianjin and Fujian Refining & Petrochemical Company Limited (FREP).
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