Ethylene oversupply to cause downturn?

08-Jun-06

The global petrochemical industry is expected to experience a downturn this year as a result of an oversupply of ethylene, as per a top executive of Formosa Plastic Corp. This was supported by the fact that global ethylene production capacity is estimated to increase 6 million tons this year, while the global demand will grow only 4.3 million tons, resulting in an oversupply of 1.7 million tons. Iran alone plans to build 13 ethylene plants to utilize with its petroleum surplus and the completion of these projects in 2009 will definitely cause difficulties for the global petrochemical industry. The predicted global demand for ethylene is based on an estimate by Global Insight Inc. that the world economy will grow 3.8% this year, as the demand for ethylene is closely related to the world economy. China and the Middle East account for 85% of the world's newly added productivity. Leading all other countries in the expansion of ethylene production capacity.