The US ethylene cycle is poised to hit a "double peak" in the coming years in the form of higher margins from low natural gas liquids (NGLs) feedstock costs, as well as higher operating rates, the chief executive of US-based Dow Chemical has been reported by ICIS. “Wet shale gas dynamics are fundamentally changing the game for integrated North American-based producers like Dow,” said Chairman, President and CEO Andrew Liveris. “This is clearly evidenced by operating rates in the US and Canada being in the 90s while Asia and Europe have been in the 70s,” he added.
He expects operating rates in North America and Latin America to rise in the near term even in a modest GDP growth environment as a result of tightening supply/demand fundamentals.
Before the wave of new US ethylene capacity hits the market in the form of new worldscale crackers in the back half of the decade, the Americas may well become a net importer of ethylene derivatives, “leading to a step change in price necessary to attract those imports,” he noted. “Further, as global demand outstrips supply in the next few years and world GDP gains further traction, we anticipate operating rates higher than 90%, leading to substantial margin expansion – a double peak, so to speak,” Liveris said.