USA overtakes Middle East as the region with the cheapest petrochemicals feedstock

26-Mar-13

The US has overtaken the Middle East as the region with the cheapest petrochemicals feedstock for the first time since the Gulf’s industry was established. The boom in shale gas production has created a wealth of cheap gas feedstock in North America, driving a new generation of petrochemicals expansion in the US. “The cash cost per tonne of ethylene in the US in Q4-2012 was lower than the cash cost in Saudi Arabia,” said Nexant vice-president, Middle East, Graham Hoar, speaking at the MEED Middle East Petrochemicals 2013 conference. It is a dramatic change in economics in the US.” The average US feedstock price has also been pushed down by a surplus of propane in the market. The price of propane in the fourth quarter was half the value than would be expected given the price of naphtha. US does not have the refrigerated facilities needed to export the propane so it is a distressed sale. However, the significant change in costs starting at the end of the last year is only forecast to be temporary, as the US is expected to invest in propane export infrastructure.