The global ethylene market is moving from ``significant profitability'' to a period of declining profit margins, said Mark Eramo, an analyst with Chemical Market Associates Inc. of Houston.
Cash margins on ethylene were up 5 percent on the U.S. Gulf Coast in 2006, but margins in the region are entering a period of decline that isn't likely to end until 2010 or 2011, he added.
The global makeup of the ethylene market also is changing. By 2011, Asia and the Middle East will have 51 percent of the world's ethylene capacity, while North America's share will fall from 29 percent in 2006 to 22 percent in 2011.
But overbuilding in Asia will create oversupplies that will send ethylene operating rates down from a peak of 92 percent in 2008 to 87 percent by 2011.
