New ethylene capacity in Asia will help in price control

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New ethylene capacities will help in price contro in Asia

Ethylene capacity in Asia is set to climb 11% to 28 million tons in 2007.
Shell, Europe 's largest oil company commissioned a US$4.3 billion petrochemical complex with a 800,000 ton ethylene plant in China. The company pend several billion U.S. dollars building a petrochemical complex in Singapore, at the heart of which is a cracker capable of producing 800,000 tons of ethylene.
Exxon Mobil, the world's biggest investor-owned oil company, may be building a second cracker in Singapore in near future.
Saudi Aramco, the world's largest oil company, plans to build US$3.5 billion refining and chemicals venture with Exxon Mobil and China Petroleum and Chemical in Fujian province.
Early in 2007, Taiwan 's Formosa Petrochemical Corp. will also be opening its largest plant in Asia .
China Petroleum and Chemical Corp. and PetroChina Co., the country's biggest oil companies, have plans to set up as many as 12 crackers between 2007 and 2011, each with capacity of about 1 million ton.
South Korea's SK Corp. has restarted its 650,000 ton cracker and Japan 's Idemitsu Kosan Co. has reopened its 600,000 ton cracker in September after a one month maintenance shutdown. Tonen General Sekiyu K. K., the Japanese refining unit of Exxon Mobil Corp., a cracker capable of making half a million tonne of ethylene is scheduled to resume operations in mid-September.

The planned expansion of Middle Eastern petrochemical production - he region's largest expansion to date, will also have a major impact on the Asian petrochemical industry. This massive increase in Middle Eastern capacity is driven by the indigenous advantage of low feedstock costs coupled with the inherent economies of scale associated with large petrochemical investments. These two factors provide compelling reasons why the Middle East is poised to take on the lion's share of new global capacity growth.
Nexant projects that approximately 19 million tons of ethylene capacity will be added in the Middle East in the next five years. This "fourth phase" of capacity additions in the region can be characterized as follows:

		Some crackers in Qatar, Iran, Oman and Egypt are being based on ethane extracted from non-associated gas - a "first" for the region.
		Increased use of alternative feedstocks (propane and/or butanes), especially in Saudi Arabia, where the government is only considering mixed-feed allocations.
		Local private sector participation is increasing at the expense of state-owned companies.
		New industrial sites are being developed in countries such as Qatar , Saudi Arabia , Iran , and Oman .
		Major focus on specialties, particularly in Saudi Arabia.

The export buildup from the Middle East would most likely remain targeted towards Asia , the fastest growing region of global petrochemical demand and the region with a substantial deficit in commodity chemicals. Ethylene prices have recently gone up very sharply & reached almost US$1500/MT by September 2006. All these new expansions as well as restart of the existing plants after maintenance shutdown will help in controlling price or in fact reducing price of ethylene. It is expected that price of ethylene would fall by 16 % or reach a level of US$1180-1200/MT. It could go down even to US$1100/MT by the end of 2006.