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Canadian ethylene demand to increase through 2005

June 21, 1999

Ethylene demand in Canada is projected to increase from 3.3 million tons in 1998 to 5.4 million tons in 2005. This is an annual average growth rate of 6.4%. Fig. 1 [107,550 bytes] shows the expected demand and supply of ethylene in Canada for this period. This supply/demand balance is among the conclusions of Chem Systems Inc., Tarrytown, N.Y., in its report entitled, "Canadian Energy and Petrochemical Supply/Demand and Economics."

Ethylene demand in Canada is projected to increase from 3.3 million tons in 1998 to 5.4 million tons in 2005. This is an annual average growth rate of 6.4%.

Fig. 1 [107,550 bytes] shows the expected demand and supply of ethylene in Canada for this period.

This supply/demand balance is among the conclusions of Chem Systems Inc., Tarrytown, N.Y., in its report entitled, "Canadian Energy and Petrochemical Supply/Demand and Economics."

Low cost producer

An abundance of natural gas in Western Canada gives it a significant cost advantage over U.S. ethylene plants. According to Chem Systems, Canadian ethylene plants are expected to operate at above 90% of nameplate capacity when the industry peaks.

The ethylene produced from ethane recovered from West Canadian gas is less expensive than that in almost all regions of the world. As a result, cash costs for linear low density polyethylene (LLDPE), high density polyethylene (HDPE), and ethylene glycol in Alberta were $70-80/ton lower than in the U.S. in 1998 (Fig. 2 [98,377 bytes]).

Canada ranks third in the world in gas production after Russia and the U.S. As a result of the gas surplus, most of Canada's gas is exported to the U.S.

Source of demand

Most of the expected demand growth for ethylene will come from new plants currently under construction in Alberta-polyethylene, ethylene glycol, and alpha-olefins plants.

In 1998 polyethylene represented almost 70% of Canadian ethylene consumption, and ethylene oxide and ethylene glycol represented another 15%. This will change, said Bruce H. Pickover, a vice-president of Chem Systems, when Amoco Canada Chemical Co.'s planned alpha-olefins plant comes on stream in 2001 in Joffre, Alta.