China's development of coal-to-olefins technology likely to change dynamics in global Polyethylene market

26-Mar-14

If China's development of coal-to-olefins (CTO) technology continues as planned across the next five years, the global polyethylene (PE) market is likely to be saturated with material through 2019, as per a report by Platts. Over three dozen coal-to-olefins and methanol-to-olefins projects are likely to come on stream in China by 2020. Those new plants are expected to add more than 10 mln metric tons of ethylene to the Chinese market. The Platts Shale to Polyethylene Report showed that the amount of ethylene produced from coal-to-olefins in China is expected to match the amount of ethylene produced from new steam cracker projects tied to shale gas developments in North America. Report data showed that not only is China adding ethylene production capacity, it is adding more than 14 mln metric tons of additional polyethylene capacity between 2014 and 2021, much of which is being fed by the coal-to-olefins-produced ethylene. The Report, in its look at new ethylene and polyethylene production developments worldwide, made clear that new Asian capacity – most of which is in China – will hit the global markets ahead of the new production planned for North America. The largest capacity gains in the Americas are projected to occur in 2017 and 2020, when new shale-based production comes on-stream. Each of those two years will see increases of little more than 2 mln metric tons, but in 2015 and 2016 alone, Asian PE capacity could climb more than seven million metric tons. The Report showed the influx of Asian material will likely increase global polyethylene surpluses by more than 50% between 2013 and 2015. Global surpluses of the plastic are projected to climb to more than seven million metric tons between 2016 and 2018.