Light olefins demand in Europe and Middle East expected to grow at CAGR of 3.4%

The light olefins market in Europe and Middle East has seen a rapid increase in demand over the past decade. The demand light olefins by volume increased from 28.7 mln tons to 41.8 mln tons between 2000 and 2010, with a CAGR of 3.8%, as per a report by GBI Research. The increase in demand came mainly from Iran and Saudi Arabia, with noticeable growth also occurring in Russia. This demand is expected to increase with a CAGR of 6.2% during the period 2010-2020, to reach around 76.1 mln tons by 2020. The majority of demand is again expected to come from Iran and Saudi Arabia, with the result that demand in Europe is expected to see a lower growth rate than that seen in Middle East. Propylene is currently produced as a byproduct of ethylene in the cracking process. But using different feedstock provides a different mixture of products. In the last few years, the changing nature of feedstock used in cracking plants has changed the dynamic of the industry. The new feedstock used provides higher ethylene content in the product mixture than the traditional feedstock. This has resulted in decreasing propylene supply growth across the globe. At the same time the end-use markets for propylene have shown greater growth than the end-use markets for ethylene, causing greater demand growth for propylene than for ethylene. The combination of increased demand growth and reduced supply growth is widening the demand/supply gap in the propylene market. All over the globe, the producers are working on technology specifically designed to produce propylene, which may provide comparable or even cheaper propylene than that produced as a byproduct in cracking for ethylene. Unfortunately, to date, there has been no announcement of cheaper or comparably-priced production of propylene using any specifically-designed technology. These technologies may fill the demand/supply gap if and when implemented.
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