Globally, economies are withstanding rising oil prices, and continue to grow. With economies still in the period of fast development, demand for petrochemicals continues to grow. The world petrochemical market in 2005 is still in a boom period although it has passed its peak Even with the price of international crude oil predicted to hover around US$50 per barrel in H2-2005, economies would sustain the high prices of petrochemicals. China continues its strong hold on plastics demand in 2004, despite the increase in prices of polymers. In fact, China continued to show the best growth all around the world. The double digit growth in petrochemicals recorded in 2004 is expected to continue into 2005.
With very few capacity additions in this period, no fundamental changes have taken place in the tight supply of petrochemicals. Supply is expected to rise when new ethylene projects as well as expansions in the Middle East and Asia region would go into operation in 2006-2008. Global ethylene production capacity would be 21.73 million tons more than in 2004, averaging an annual growth of 4.9%. Demand in the same period is estimated to grow steadily at an annual rate of 4.5%. In this scenario, demand will no longer exert pressures on supply, ending the booming petrochem demand. China's petrochemical boom is expected to continue into H1-2006, and prices will stay at a high level. The boom period is expected to end in H1-2006, with prices and gross profits sliding.
12-Aug-05 
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