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FORESIGHT 2020

Will 2020 be a year of change for the global olefins industry?

By Patrick Kirby, Principal Analyst, EMEARC Olefins

2019 marked a transition year from the recent highs for the global olefins industry, and 2020 has all the hallmarks of a year of major developments. Overcapacity is set to result in monumental changes in the market balance – and we expect to see these dynamics manifest at rapid pace this year.

What are the key trends our analysts will be watching in the year ahead? We highlight our top five.

  1. Energy and economy
  2. Refining and chemicals integration
  3. NGL developments
  4. Olefin derivative market shifts
  5. Market transformation in China

This article includes excerpts from the report, Global olefins: 5 key trends to watch in 2020. Fill in the form on this page to get the complimentary report in full, with charts and predictions for the coming year.

1. Energy and economy

The prevailing crude oil price is a crucial factor affecting market pricing, profitability and major trade flows of olefins and derivatives. Despite remaining in a relatively tight band of US$60-70 a barrel through 2019, the oil markets have headed into 2020 from a tumultuous year. Geopolitical tension and oversupply in the oil markets will both have an impact on prices.

Meanwhile, we expect global GDP growth in 2020 to be marginally higher than the 2019 level of 2.3% – which was the lowest since 2009.

Read the full report for more on our forecast for Brent and our 2020 economic outlook.

2. Refining and olefins integration

Refining and olefins integration has been an integral aspect of the market for some time. Recent investments have largely focused on either gas-based steam cracking or on-purpose propane dehydrogenation plants. But how will the energy transition change the way companies look at integration, and where does crude-oil-to-chemicals fit in?

Fill in the form to read our view. We also consider the likely impact of new IMO regulations on the olefins industry.

3. NGL developments

Will ethane and LPG remain attractive as olefins feedstocks? We expect upstream supply growth and infrastructure developments to influence ethane prices and ripple into the LPG markets – and predict a significant rise in US LPG production and export capacity in 2020 as a result.

Read the full report for more on these developments, and the impact on global olefins production units.

4. Olefin derivative market shifts

If 2019 was a transition year for the olefins markets, 2020 could mark the start of the deepest downcycle the market has ever seen. Overinvestment in ethylene capacity is similarly driving overinvestment in its primary derivatives, such as polyethylene (PE), monoethylene glycol (MEG) and styrene. Utilisation rates will see a significant fall this year.

But how far? Which region will be hardest hit? And how will this affect prices? Read the full report to find out more.

5. Market transformation in China

China will add approximately 5.8 million tonnes of new ethylene capacity this year. The steam cracking capacity that will be added – primarily via the ZPC and Hengli mega refinery-petrochemical complexes – is at a similar level to the capacity growth of the previous seven years combined.

The build will also underpin sizeable propylene capacity growth, alongside significant expansions in China via new propane dehydrogenation (PDH) investments. This growth in propylene capacity will exceed combined world propylene demand growth expected in 2020 – putting the Asia Pacific region in sharp focus.

Are you ready for a year of major developments in the global olefins industry? Fill in the form at the top of this page to read this report in full.

 

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