The Middle East and Asia are witnessing a significant expansion in ethylene production as new cracking facilities come online and existing ones continue to scale up. With supply increasing, many companies are turning their attention toward the Chinese market, which is seen as the key growth driver for the global ethylene industry.
Jim Weinrauch, an analyst with Singapore-based Naphtha Information Services LLC, commented on the global ethylene landscape: "Eventually, all production capacity will be directed toward China’s rapidly growing market." While demand in China is currently outpacing supply, some analysts express concerns that the country's demand may not meet the high expectations set by producers.
Weinrauch added, "China has captured the interest of companies across Asia and the Middle East. In Asia, it's the only major importer, and that's obvious at a glance." Meanwhile, Qu Guangdong, an analyst at Beijing-based SRIConsulting, predicts that China's domestic ethylene output will grow by 9.5% annually through 2015.
Several new plants are under construction, including CNPC’s facility in Fushun, Liaoning, which is expected to start operations in 2010 and produce 800,000 tons of ethylene per year. Another PetroChina plant recently received approval from China's National Development and Reform Commission and will double its annual cracker capacity to 1.2 million tons.
Qu emphasized that regardless of international developments, China is committed to building its own production capabilities. Weinrauch noted that this push for self-sufficiency could leave foreign producers struggling to find a place in the market. He said, "Technically, demand is emerging, but the Middle East should consider whether China needs more crackers while it continues to expand."
He continued, "In the Middle East, once real production capacity is established, China is moving toward self-sufficiency. This means there won’t be much room for everyone anymore." Although some companies anticipated a drop in import demand, Qu remains optimistic about the market outlook for the next few years.
Qu stated, "I estimate several crackers will be built before 2010, though some projects may be delayed until around 2015. These delays could help ease supply and demand pressures." Gao Chunyu, senior director at Sinopec Consulting, highlighted that the development has faced numerous challenges.
Gao noted, "Many companies are unhappy with signing engineering contracts. While this is a global issue, it has already affected China." He pointed out that the rapid rise in new cracking plants has led to a growing shortage of skilled engineering personnel.
Regarding the new factory projects, he said, "Construction is still ongoing, but the pace has slowed down." Although this is a worldwide challenge, as long as China relies on imports, downstream companies will likely face higher prices.
Even with new cracking plants now operational, Qu warns that importing raw materials won't be the only factor influencing ethylene derivative prices. He added, "International oil prices will also cause fluctuations, so future capital costs are expected to rise as well."
JiangSu Speeder heavy machinery Co., LTD , https://www.speederjoint.com