News

It is well known that shale-driven ethylene expansions are taking place in the North American market. The question is, will these growing supplies of olefins outstrip the ability of units downstream to take in product? US ethylene production is at an all-time record level, according to data from the American Fuel and Petrochemical Manufacturers association. Data for the first quarter of 2016 showed that ethylene production was at 6.857 million mt, down fractionally from the previous quarter but nearly 10% higher than the level from the first quarter of 2015. The production growth is due to cracker project expansions and strong utilization on the Gulf Coast. LyondellBasell brought online an expansion at its Corpus Christi facility in the second half of 2015 and utilization rates are estimated at about 94%. Meanwhile, downstream ethylene demand kept pace, but by the slimmest of margins. Production of polyethylene — the main end-use derivative for ethylene — climbed from 4.18 million mt in the first quarter of 2015 to 4.5 million mt in the first quarter of 2016. Ethylene conversion into polyethylene is roughly 1:1. Most of the new shale-driven cracker projects are well underway and are expected to be completed in the next few years with majors such as ExxonMobil, Dow and CP Chemical bringing online in excess of 7 million mt of ethylene capacity by 2019. Will this expansion be met by derivative demand? Our analysis shows that the ethylene market in the US will be balanced with 5.8 million mt of polyethylene capacity, 1.7 million mt of monoethylene glycol capacity and a slight increase in ethylene dichloride capacity brought online over the same time frame. Meanwhile, the projected balance for the propylene market is less stable. With the increase in lighter feedstock cracking the US has seen production of cracker co-pro...