Growth in global ethylene market driven by APAC Region

The global ethylene market is forecast to increase slightly in the coming years, climbing from US$131.88 bln in 2012 to US$177.83 bln by 2017, at a Compound Annual Growth Rate (CAGR) of 6.2% as per RnRMarketResearch.com. The Asia-Pacific region will drive the ethylene industry, with its own market expected to increase from US$50.59 bln in 2012 to US$71.63 bln by 2017, at a CAGR of 7.2%. North America will rank just behind, growing from US$37.78 bln in 2012 to US$46.61 bln by 2017, at a CAGR of 4.3%. The global ethylene industry is witnessing a change in the supply scenario in various parts of the world. In North America, ethylene supply is expected to boom in coming years as abundant and inexpensive natural gas liquids (NGLs) feedstock form shale gas is attracting companies to establish their plants in the region. In contrast to North America, ethylene industry in Europe is suffering from high cost of production due to high crude oil prices as most of plants in the region are based on naphtha feedstock. Middle East producers still have advantage of cheaper and subsidized NGLs feedstock, however, supply of cheaper feedstock to new plants is uncertain. This is likely to slow down the capacity addition in the region. Additionally, Asia-Pacific will continue to be the largest region in terms of capacity addition, growing from 49.67 mln tpa (MMTY) in 2012 to 67.40 MMTY by 2017, at a CAGR of 6.3%. Furthermore, due to heavy investment from petrochemical companies, the US capacity addition is forecast to witness a significant boost, jumping from 27.17 MMTY in 2012 to 36.49 MMTY by 2017, at a CAGR of 6.1%. Analyst says, “Less expensive ethane derived from US wet shale gas makes ethylene production highly attractive, and drives large scale capacity additions. Firms such as The Dow Chemical Company, Chevron Phillips, Exxon Mobil and Royal Dutch Shell are betting on the US becoming increasingly competitive, and are constructing ethane crackers to produce cost-advantaged ethylene.” With regards to Asia-Pacific’s dominance in the ethylene market, Pant says that there are two main reasons for the historical growth: insatiable demand from China’s large and growing population for polyethylene and ethylene oxide, and the country's resilient economy during the recession. The Asia-Pacific region also boasted a relatively faster post-recession recovery time, causing minimum demand loss. The major sectors that consume ethylene are polyethylene, ethylene oxide, ethylene dichloride and ethylbenzene. These industries accounted for a massive 94% of global consumption in 2012.