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According to recent news from Platts Energy Information Network, the substantial increase in ethylene production capacity in the United States and Asia, the commissioning of new export terminals in the United States and the ethylene downstream market will continue to remain weak, and the outlook for the global ethylene market in 2020 is bleak
.
U.
S.
and Asia ethylene production blowout
S.
and Asia ethylene production blowout
In the United States:
Since 2017, about 8.
18 million tons of new ethylene capacity has been added, and it is planned to add another 2 million tons of ethylene capacity by the end of 2019
.
Another 6 sets of crackers using naphtha as raw material will also be completed and put into operation by the end of 2020 and later, with a total production capacity of 8.
3 million tons
.
in Asia:
China Hengli Petrochemical and Zhejiang Petrochemical will add 2.
9 million tonnes of ethylene capacity in 2019-2020
.
On the other hand, spot ethylene demand may be pressured by lower demand and prices for downstream products such as polyethylene and ethylene glycol
.
New U.
S.
ethylene export terminal put into use will hit European ethylene production
S.
ethylene export terminal put into use will hit European ethylene production
The United States currently has an ethylene export terminal in operation
.
Enterprise Products Partnership's (EPP) new 1-million-ton ethylene export terminal in the US Houston Seaway will gradually increase ethylene exports in 2020, with construction of the second phase of the project scheduled to start in the fourth quarter of 2020
.
Market sources said European producers will need to reduce ethylene production and prices as more imported ethylene products flood the region, as new ethylene capacity comes on stream in the US and new export terminals come online
.
European producers will struggle to maintain market share
European producers will struggle to maintain market share According to market sources, European ethylene producers will strive to maintain market share amid an influx of competitive ethylene cargoes from the United States, potentially by taking advantage of contract prices as well as offering attractively priced spot goods to domestic customers.
quantity to do this
.
According to the latest customs data, from January to September this year, the total amount of ethylene exported from the United States reached 223,422 tons, an increase of 39.
5% over the same period of the previous year.
The volume of ethylene to Belgium increased significantly to 98,089 tons from 7,323 tons in the same period last year, and the volume of ethylene exported to Spain increased significantly to 11,477 tons from 20 tons in the same period last year
.
In 2020, the number of shutdowns of steam crackers in Europe will be less than in 2019, but given the weak macroeconomic environment, the ethylene supply in the European market in 2020 is likely to be healthy or even surplus
.
Naphtha feedstock prices to remain firm
Naphtha feedstock prices to remain firm Market participants expect naphtha feedstock prices to remain firm in 2020, mainly due to the International Maritime Organization (IMO)-mandated slashing of the maximum sulphur content in marine fuels from the current 3.
5% to 0.
5% from January 1, 2020
.
Market prices for crude oil and naphtha may rise as crude oil processing increases to meet growing demand for marine fuel
.
In Asian markets, the ethylene/naphtha spread narrowed to an average of $152.
63 per ton on October 25, 2019, the lowest level since May 2012, according to data from S&P Global Platts.
Below typical breakeven spreads of $300-350/t
.
However, market participants said that the operating rate of steam crackers in the Asian market was still high in 2019, which was supported by relatively strong propylene and butadiene production profits, but propylene and butadiene production profits are likely to trend in 2020.
in downturn
.
In the European market, ethylene producers are reducing the operating rate of crackers in response to a tough environment from weak demand in the downstream derivatives market and increased ethylene imports from the United States, sources said
.
The market is anticipating the impact from EPP's new ethylene export terminal
.
According to analysis by S&P Global Platts, the average spot price of ethylene in Europe is expected to drop to $1,008/ton (CIF Northwest Europe) in 2020, down from the average price of $1,068/ton in 2019
.
In 2020, naphtha prices are expected to rise alongside crude oil prices, further widening the gap between liquefied petroleum gas (LPG) and naphtha prices
.
U.
S.
ethylene prices are expected to remain competitive compared with other regions, supported by cheap ethane feedstocks, but unplanned shutdowns of crackers could cause volatility in ethylene prices, market participants said
.
In June of this year, the spot price of ethylene in the United States hit a record low price of 11.
75 cents / pound (FD Monte Bellevue)
.
By the end of November, however, U.
S.
ethylene prices had recovered to around 23 cents per pound
.
