The world market for ethylene oxide (EO) is projected to reach 27.3 million tons by 2017, as per Global Industry Analysts, Inc. Growth in the market is mainly spurred by increasing consumption from the Asian and Middle East markets. Rising demand from end-use segments including, MEG, surfactants, and ethanolamines will further drive home rapid gains.
Globally Ethylene oxide (EO) demand is expected to increase at an annual average rate of 3-4% per year, spurred by increasing consumption from the Asian markets. Ethylene oxide market witnessed a rebound in demand in 2010 with growth mainly stemming from MEG and surfactants markets. However, demand recovery in the short term is expected to be restricted to previously attained highs in demand levels from where the market started witnessing a downward slide. Growth in the industry is expected to be driven by burgeoning demand from end-use markets including MEG, surfactants, and ethanolamines. Besides, producers are expected to increasingly focus on ethylene oxide derivates in the ensuing years as MEG margins come under pressure following overcapacity. Currently, Asia-Pacific and Middle East are considered the regional hotbeds for setting up Ethylene Oxide manufacturing plants. The fast-paced increase in the number of EO plants in Middle East and Asia is displacing the capacity and demand for locally produced EO in mature markets such as North America and Europe. Producers in North America and Europe are at a disadvantage with Middle East companies both in terms of economy of scale and feedstock prices.
The economic recession severely impacted the growth in demand for EO in recent years. This, in conjunction with significant increase in capacity expansion led to a significant trough in profit margins, particularly noticeable in the developed markets of North America, Europe and Japan. The global EO market is expected to be hit by overcapacity due to differences in the growth rates of consumption and capacity expansions. Surge in planned capacity expansion in the Middle East and Asian markets is expected to change the supply scenario substantially in the long term. Beyond 2010, this is expected to lead to an oversupply situation, which would accelerate restructuring in the industry with capacity rationalization and extensive plant closures becoming the norm, specifically in the western world. World demand for Monoethylene Glycol (MEG) is expected to take rapid strides and reach a volume of about 25 million metric tons by the year 2014. MEG demand is likely to remain strong, specifically in the Asian region, where the markets are witnessing a robust growth. At the same time, the North American market for MEG used in polyethylene terephthalate (PET) resins and containers is already showing signs of maturity, predominantly because of the constant lightweighting of the plastic bottles in the region that reduces the quantity of PET.
Asia-Pacific represents a major powerhouse for the global Ethylene Oxide market, summoning up a substantial share of the market, as stated by the new market research report on Ethylene Oxide (EO). The Asian market, propelled by growth in China and India is forecast to expand at the strongest compounded annual rate of 6.6% through 2017. China is considered one of the largest consumers and producers of EO worldwide, and with the rapid development of the surfactants and polyester sectors and the resultant growth in demand for EO, the country is witnessing a rise in the number of newer, cost-efficient EO facilities. Segment-wise, surge in the demand for polyester fiber in Asia-Pacific region is fuelling the demand for Ethylene Glycols at a rapid pace. The Ethylene Glycol (EG) segment captures the largest share of the global market and is also skated to witness the fastest growth rate, buoyed by rapid advances in the Asian market, dominated by India and China. EG producers continue to face heightened pressure due to concerns relating to excess supply and diminishing margins. At the same time, the underlying demand for EG remains sufficient for supporting long-term growth of the market.
Key players profiled in the report include BASF SE, Clariant International, The Dow Chemical Company, Huntsman Corporation, Indorama Ventures Public Company Limited, INEOS Group Holdings PLC, LyondellBasell Industries, Reliance Industries Limited, Saudi Basic Industries Corporation, Shell Group, among others.