In the period 2000-2005, ethylene grew by about 3.5%, while propylene grew by about 4.5%. The consumption of ethylene and propylene in 2000-2005 slowed down mainly due to weakness of the global economy. 2005 was a weaker year for both ethylene and propylene, when ethylene grew only by 3%, with demand reaching levels of reached a level of 107 million tons, while propylene grew by just above 4%, with demand reaching a level of 67 million tons. Ethylene and propylene generally grow by about 1.5 times the World GDP growth. But in 2005, both ethylene and propylene grew 1% lower compared to the average growth seen for them so far. This could be attributed to an increasing share of the service sector in the global economy, reducing contribution of the manufacturing sector to the GDP growth to almost 25%. This has weakened the relationship between growth of ethylene, propylene and hence petrochemicals as well as polymers, to economic growth of the World.
However, the period of 2005-2010 will see a recovery in global demand for ethylene and propylene. The demand growth for ethylene will increase slightly from 4% to about 4.3% until 2010. Propylene could attain an average growth of just below 5% (4.8%) until 2010. Ethylene will reach a level of 132 million tons by the end of 2010 and propylene will attain a level of 85 million tonnes.
Global ethylene demand is dominated by polyethylene - the largest polymer used globally. Ethylene oxide (used for PET fiber and plastic), ethylene dichloride (EDC used for PVC polymer) and ethyl benzene (used for styrene monomer in the styrenic group of polymers) are also significant ethylene consumers. Ethylene production capacity will grow at about 5.5% per annum (pa) during 2005-10, an increase from the 2000-05 rate of 3.5% pa.
Global demand of propylene is dominated by polypropylene - one of the fastest growing polymers. Besides, propylene is used to manufacture propylene oxide (used for PU), cumene (used for phenolic resin) and acetic acid. Propylene production capacity will increase at just above 5% pa during 2005-10, a rise from the 2000-05 rate of 4.1% pa.
There are essentially two different
feedstock materials required for manufacture of
ethylene; naphtha and ethane/propane.
Naphtha is predominantly used in Europe and Asia, and is more versatile because it can produce other streams of products, but is more expensive. It is easier to transport naphtha as compared to ethane/propane gas. Ethane/Propane gas generally used by North America and the Middle Eastern region is quite economical for production of ethylene and propylene derivatives but have limitation to produce a wider variety of products.
The Middle Eastern region is going to be a strong player in the coming 5 years, increasing its global market share of total ethylene capacity to about 20%. This will increase the amount of ethylene produced from ethane feedstock on a global basis. During 2005-10, supplies of ethylene from ethane feedstock will increase about 7.1% pa.
High energy prices and relatively slow demand growth in North America and Europe will limit investments in new capacity in these regions.
For most of the other regions that do not have advantageous reserves of natural-gas-based feedstocks, other feedstocks such as naphtha, gas oil, and butane will become more important when operators make high-valued co-products such as propylene, butadiene or benzene.
Ethylene as well propylene capacity utilizations are likely to go beyond 95% from about 92 % in 2005, with growth expected to be slower compared to its demand growth. Propylene, because of higher growth compared to ethylene and lower capacity build up, mainly because of lower availability of propane in the fast growing Middle Eastern region, is expected to achieve higher capacity utilization. Higher capacity utilization along with increase in energy cost will put pressure on prices of ethylene and propylene. The pressure on propylene will be higher as compared to that on ethylene.