HOUSTON — Global ethylene operating rates are expected to be below 90 percent through 2001, as new capacity continues to run ahead of demand, according to CMAI's Mark Eramo.
With about 60 percent of global ethylene production going into polyethylene, this supply situation also will have a direct effect on PE markets. Ethylene cash margins are expected to fall below reinvestment levels in the next two or three years, Eramo said.
Many expansions already underway also will make an impact. In North America alone, three major expansions are set for 2001. A Nova Chemicals/Union Carbide Corp. cracker will add 2.8 billion pounds of capacity in the world's largest such project. A BASF Corp./Fina Oil and Chemical Co. project will add 1.9 billion pounds and Formosa Plastics Corp. USA will add 1.8 billion pounds.
Globally, almost 51 billion pounds of ethylene capacity will be added between 1998 and 2003.
In the short-term, planned and storm-related outages have tightened ethylene supply in the U.S. Gulf Coast, allowing PE producers to raise prices 3 cents per pound.