Global PE demand seen rising to 2018

WORLDWIDE polyethylene demand is forecast to rise by approximately 3.7% per annum between 2013 and 2018, according to new GlobalData report. The average forecast increase for the period is at a slightly higher level than growth during the 2003 to 2013 period, says the UK-based research and consulting firm.

This higher-than-historic increase will occur in the United States and Europe, GlobalData’s latest report said.

The US will witness a 2.4% growth rate per annum during the forecast period, a marked increase compared to its 0.7% levels from 2003 to 2013.

Demand in Europe, primarily in Russia, will meanwhile climb at 2.8% per year from 2013 to 2018, almost three times the level of growth during the last decade.

These demand rises in the US and Russia will be somewhat offset lower demand in Asia, said GlobalData. , A lower increase of 4.8% in Asia is predicted over the 2103 to 2018 period, compared to its 6% rate during 2003-2013, due primarily to the region’s slower economic growth.   

‘Although below recent historical levels, demand in Asia remains fairly robust

and will continue to boost expansion in the global polyethylene market’

Carmine Rositano, GlobalData managing analyst covering Downstream Oil & Gas, explained: “Lower feedstock costs from US shale gas production are providing the country with a competitive advantage, with increasing investments in its petrochemical plants driving polyethylene demand growth in both domestic and international markets. Although below recent historical levels, demand in Asia remains fairly robust and will continue to boost expansion in the global polyethylene market.

“As a result, polyethylene capacity is now expected to increase at about 5.3% per year between 2013 and 2018, which is higher than the 3.6% experienced over the last decade. Capacity additions will be most prevalent in the US, given its advantaged cost competitive position, and also Russia, which is augmenting its petrochemical industry to reduce its reliance on imports. New capacity will also continue to come online in Asia, but at a slower-than-historic rate.”

Despite the lower estimated cost of crude oil in the forward price curve to 2018, prices for polyethylene will increase at around 1.3% per year up to the end of the forecast period. This attributable to petrochemical demand increasing at approximately three times the rate of that for oil.

“The key trend emerging in the polyethylene market will be the ongoing surplus position in the US, where excess production will be directed to expanding markets in South America and Asia. Additionally, the lower feedstock and fuel costs for US plants, compared with those in Europe, will likely result in future European plant closures and further adjust global polyethylene trade flows,” Mr. Rositano said.