HOUSTON — Pricing for ethylene and propylene should continue to decrease in 1998 and 1999 before climbing again in late 1999 and 2000, according to industry consultants at the CMAI World Petrochemical Conference, held April 1-2 in Houston.
Ethylene will be in oversupply in the near term, as excellent profit and strong demand have led to a number of capacity additions, according to CMAI consultant Mark Eramo.
This overcapacity, combined with the Asian economic crisis, will lead to delays or cancellation of 4.4 billion pounds of ethylene capacity planned for Southeast Asia between 1999 and 2001, Eramo said.
However, those factors are not expected to affect plans of North American ethylene makers, who expect to add more than 3 billion pounds of capacity in 1998 and 1999.
``I don't see them flinching,'' Eramo said of North America's ethylene producers.
Propylene is also in short-term overcapacity, a situation that has caused spot prices to decrease by 10 cents per pound in the past year, according to CMAI consultant Steve Zinger.
But modest 2.5 percent growth in demand in 1998 and 1999, combined with projected growth in demand of 5-6 percent annually in subsequent years, could bring the propylene market into balance by 2001-02, which would result in higher prices and concern about future supplies, Zinger said.
``The demand for propylene is growing quicker than access to supplies,'' he added.