Olefins demand growth to rebound after 2000

U.S. Ethylene Supply, Capacity [57,454 bytes] A reduction in exports and a continuing sluggish world economy are some of the reasons cited for the slowing growth of U.S. petrochemical production expected over the next few years, according to a recent report issued by Chem Systems, Tarrytown, N.Y. According to the report, petrochemical demand is expected to rebound only after the year 2000, when world GDP growth is anticipated to pick up and lower petrochemical prices return.

Dec. 28, 1998

2 min read

U.S. Ethylene Supply, Capacity [57,454 bytes]

A reduction in exports and a continuing sluggish world economy are some of the reasons cited for the slowing growth of U.S. petrochemical production expected over the next few years, according to a recent report issued by Chem Systems, Tarrytown, N.Y.

According to the report, petrochemical demand is expected to rebound only after the year 2000, when world GDP growth is anticipated to pick up and lower petrochemical prices return.

Projected demand

Ethylene production is expected to reach 64.4 billion lb in 2005, growing at an average rate of 2.9%/year, according to the report. Operating rates are expected to remain low through 2000.

Chem Systems found that ethylene plants' production ran at an operating rate of 94% during 1997 (see graph, this page). The current ethylene operating rate is 90% and is expected to drop to 88% in 2001, according to the report.

The decrease in ethylene capacity utilization coincides with the on-stream dates of both the Formosa Plastics Corp. cracker in Taiwan and the cracker being built at Port Arthur, Tex., by BASF Corp. and Fina Oil & Chemical Co. (OGJ, Oct. 12, 1998, pp. 24 and 32).

Demand for individual petrochemicals, such as for propylene, was based on expected growth in GDP and per-capita consumption. It was found that annual U.S. propylene demand will increase to 36 billion lb in 2005 from 26 billion lb in 1997. This growth rate is 1.6 times that of GDP growth, says Chem Systems. The firm expects U.S. demand for other petrochemicals, such as butadiene and benzene, to increase by 2005 as well. As a result, benzene production, for example, will approach 3 billion gal/year by 2005, a rate equivalent to 1.1 times GDP growth.