The Emergence of New Ethylene Powerhouses
New ethylene production will come predominantly in the United States and Asia Pacific (particularly China), and to a lesser extent Europe and the Middle East. We currently expect that the global ethylene industry will be in a declining trend to 2019 and that operating rates will remain above 88% through 2022 — despite large ethylene capacity additions taking place globally.
Recent high operating rates are driven by a limited amount of ethylene capacity additions in the last 4-5 years relative to the demand growth observed. This places the industry in a good position as it enters this next trough in the ethylene industry cycle, which we expect to be relatively shallow and brief compared to previous down cycles.
Our 2018-2019 price forecast for Brent crude oil (nominal dollars basis) is now US$55-60/bbl, while our 2020-2022 price forecast for Brent crude oil approaches US$80/bbl (Nominal). How will this effect the global ethylene cost curve and prices? What do these margin curves look like on a regional basis and where will the new projects be located?
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