As per a market study "Ethylene Value Chain USA" by Ceresana, the importance of ethylene as major feedstock in the petrochemical industry is corroborated by the immense demand volume. In 2013, the USA single-handedly consumed about 25 mln tons of ethylene. Thus, ethylene is by far most important petrochemical feedstock. The value added in downstream sectors is considerable. Besides the three polyethylene varieties HDPE, LLDPE, and LDPE, direct applications of ethylene include chemicals such as ethylene dichloride, ethylene oxide, alpha olefins, and ethylbenzene. Further, smaller applications are, among others, vinyl acetate monomer and the elastomer EPDM.
The shale gas boom in the USA resulted in an unprecedented surge of announcements to construct new ethane crackers. In contrast to other feedstocks such as naphtha or propane, the cracking of ethane yields a rather high amount of ethylene. Ceresana forecasts about three quarters of total ethylene output being ethane-based in 2021. The notable decline of prices for ethane in recent years has caused a significant change of the cost situation for manufacturers of ethylene. Average feedstock costs per tonne of ethylene manufactured fell by about 40% between 2008 and 2013. Manufacturing ethylene from ethane enjoys a notable competitive advantage: In the fourth quarter of 2013, cash costs (consisting of fixed, variable operational and feedstock costs minus profit generated with by-products) were two thirds lower when using ethane than when using naphtha as feedstock.
The US polyethylene industry is expected to remain the main consumer of ethylene in the USA. Depending on density and rigidity of the product, polyethylene is classified as either HDPE, LDPE or LLDPE. In 2013, about 60% of US demand for ethylene was accounted for by producers of these plastics. Large production sites for HDPE and LLDPE in particular will be constructed in the near future. Given the upturn of the real estate sector and ever increasing consumption expenditure, prospects for domestic demand in USA are good. This will result in growth impulses for polyethylene demand via development in the construction and packaging industries. However, sales volume of polyethylene on foreign markets has to rise notably in the future in order to ensure an acceptable degree of capacity utilization of US facilities.
In 2013, production of ethylene oxide was still at levels recorded in 2009, the year the crisis hit, whereas demand in downstream industries, PET in particular, recovered notably. Accounting for about 50% of ethylene oxide demand at the moment, ethylene glycol, used in the production of PET, is the most important sales market. Recently, USA had to increasingly import ethylene glycol. US demand for ethylene oxide in the production of ethylene glycol will rise again in the future. The plastic PVC is produced via the intermediates ethylene dichloride and the vinyl chloride manufactured from it. In the past, notably more than 40% of US PVC output had been exported. This was a major support for the PVC that suffers from low domestic demand. The majority of all plastic pipes are made from PVC by now. Thus, the strong need for modernization of the water supply and sewage networks in USA should have a positive effect on the demand for PVC. Compared to other regions, USA consume a rather high amount of alpha olefins. Alpha olefins are mainly used to manufacture polyethylene, conveying a higher rigidity to the final product. The application ethylbenzene can only to a limited extent profit from the shale gas boom. Ethylbenzene is almost exclusively processed into styrene, the largest part of which is, in turn, in converted into polystyrene. After the polystyrene industry suffered a number of blows in the past eight years, impulses from the packaging as well as electrics and electronics sectors are offering the chance for moderate growth.
Should all current plans for capacity creation and expansion be realized, production capacity for ethylene will increase by half until 2018, despite the USA offering large capacities already.
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