The Middle East's share in the global ethylene market is expected to grow to 148 million metric tons in 2010, (17%) in 2010 from 114 million metric tons (9%) in 2004, indicating that 40% of all new ethylene capacity will be built in the Middle East. A growth of over 100% in net trade from Middle East to East Asia has been estimated by 2010, with China accounting for a major part of the increase.
A projected boom in demand for petrochemicals in the Asia-Pacific region is catching up rapidly with the US and Europe, due to several reasons. On the demand side are:
* Increasing demand for polyolefins, expected to grow at around 10% pa.
HDPE is estimated to grow by 9%, LLDPE by 12% and PP by 10%.
* Access to cheaper gas, with ethane costing US$0.75 to 1 per MMBTU. At these levels, western producers will need crude oil at below US$ 5 per bbl to be competitive for LLDPE in Asia.
* A trend of emerging alliances between the Middle East and China, which will combine the benefits of the Middle East's cheap feedstock costs and China's access to Asian markets.
China's stupendous economic growth and insatiable demand for all petrochemical products will continue in 2005, despite escalating oil prices leading to a tremendous increase in prices of almost all feedstock. The Chinese economy is expected to grow by 8.5 % in 2005 if not by 9%, with petrochemical products expected to show growth of at least 8.5% over 2004.
It is clear that the steady boost in petrochemicals capacity in the Middle East is assumed to get absorbed by growing demand from China in the next decade. However if the Chinese economic growth rates disappoint, it is feared that this forecast might capsize.
Most petrochemical demand scenarios are based on the assumption of China's booming economic rate. Lower than anticipated economic growth in China may result in a shift in the balance of petrochemicals that will cause prices to fall leading to the disappearance of margins in the future
06-Jun-05 
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