Global PE capacity growth to drive down rates 23 Mar 2017

Houston, 23 March (Argus) — With the addition of new ethylene and polyethylene (PE) capacity, particularly in China and the US, global PE capacity growth is on track to exceed demand growth by 50pc and subsequently drive down PE operating rates from 2016-2021.
Global PE demand growth is estimated at 41mn t through 2026, with the strongest growth expected in Asia generally and China in particular, Argus vice president of ethylene and derivatives Jimmy Levine said at the Argus Petrochemicals Summit in Houston today.
Meanwhile, with planned expansions in the US alone, additional supply capacity is estimated at more than 8mn t/yr by 2021, most of which will need to be exported. Globally, the US accounts for less than 30pc of total supply growth.
If demand growth remains at normal projected rates, the global PE market will likely enter a trough around 2019. "Globally, expect a drop in global operating rates from 86pc to just about 80pc with the bottom reached in 2019," Levine said. "Certainly we'll add all this capacity but we are going to run lower operating rates for a time."
How low margins fall during the trough will depend partly on how aggressive US producers are in taking market share to fill the new assets, Levine added. If demand growth remains steady, a cycle peak should return by 2024-2025.
Mar 27, 2017 14:47
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