Ethylene gas crackers in North America have become prohibitively expensive due to tremendous increase in gas feedstock. Shortages of contractors and equipment, coupled with plant construction costs increasing by almost 70-80%, will also make starting new projects and expanding existing projects in the region challenging.
Therefore, this has eroded cost leadership globally
and more so compared to the Middle East producers.
US producers are also being seen to cut back
PE productions. One estimate suggests that US
producers have cut more than 10% of PE capacity
since 2000 and plan to cut a further 10-15%
by the end of this decade. Very little polyolefin
capacity expansion has been planned for North
America. In the US , no new polyethylene or
polypropylene plants are planned. In Mexico,
only Indelpro's capacity expansion is estimated
to start up in 2007-2008. If Canada's Nova Scotia
polyolefins project commences, is not expected
to be on line until after 2010.
This indicates that USA will have to import to fill the gap between demand and supply. North America is expected to move into a net short position on polyolefins and becomes a net importer by 2008-2009, the Latin American region will be net short of polyethylene through 2015.
The abundant availability of ethane gas in the Middle East will enhance the cost advantage as the time progresses and the players in the Middle East region will naturally gain higher market shares. Higher availability of ethane gas will help the Middle East region increase the capacity of polyethylene. They will become the low cost polyethylene producers in the World and will rule the markets of polyethylene, replacing USA 's supremacy.
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