Global ethylene industry: risk of rationalization returns

Between now and 2025, the world will invest in approximately 68 million metric tons of new ethylene capacity, almost 50 percent more than our ethylene demand growth projection over the same period. Capacity additions are being driven by traditional chemical companies reinvesting recent returns, plus ethane availability in North America and much more rapid development of refining-chemical integration in the Middle East and Asia Pacific. This investment on multiple fronts is expected to push the global ethylene industry into bottom-of-cycle conditions by the mid-2020s. It comes after a recent period of strong utilization rates and profitability in most parts of the world. Wood Mackenzie assesses that the top-of-cycle in global operating rates has already occurred in 2018. This insight will aim to provide more focus on the geographical locations we see as particularly exposed to the threat of closure and our rationale behind this.