BAKU, Azerbaijan, June 10
By Leman Zeynalova - Trend:
Ethylene demand is expected to increase at a healthy 2.5 percent compound annual growth rate (CAGR) over the decade, Trend reports with reference to GlobalData.
Asia has been the largest contributor, both in terms of demand and supply, and is likely to continue its dominance, the company believes.
“Growth in the ethylene market is expected despite a short-term slowdown in demand. The economic impacts of COVID -19 triggered a steep downfall in ethylene demand growth in 2020. This is expected to rebound in 2021, and is likely continue to be around 2-3 percent until 2025,” says GlobalData.
Historically, global demand for ethylene has grown at a multiple of global GDP growth.
HIS Markit’s data shows that most of the increased consumption over the last five years is from Northeast Asia, North America, and the Middle East; within these three regions, ethylene derivative capacity has been developed to capitalize on superior ethylene cost competitiveness (Middle East and North America) or to serve booming markets (Northeast Asia). Overall demand for ethylene derivatives is now fueled primarily by emerging economies and is projected to further grow in the near future. In 2020, the COVID-19 pandemic affected almost every region of the world leading to a sharp decline of 3.2 percent in GDP; ethylene markets have reacted differently depending on their nature and location.
Polyethylene (HDPE, LDPE, and LLDPE) is the major outlet for ethylene. The next-largest market is ethylene oxide (EO), used primarily to produce ethylene glycol (EG), which is used primarily in the production of PET (for polyester fibers, PET bottles, and polyester film). The third-largest outlet is ethylene dichloride (EDC), which is used for the production of PVC. Other major ethylene uses include ethylbenzene, alpha-olefins, and vinyl acetate. Overall, ethylene demand is exposed to the broader economy, underpinning diverse sectors. Some derivatives tend to be more cyclical as they are ultimately used to produce durables (EDC, EB, alpha-olefins, and acetyls), while others (HDPE, LDPE, LLDPE, EO, or linear alcohols) tend to be more resilient as they are used primarily in consumable products.
During 2020–25, global consumption of ethylene is forecast to further expand, driven primarily by growing needs of emerging markets as well as a post-COVID-19 pandemic recovery. Polyethylene production will account for the largest share of new ethylene consumption, followed distantly by ethylene oxide and ethylene dichloride. Ultimately, ethylene demand will be driven primarily by the growth of polyethylene-based consumables; increasing PET fiber, bottle, and packaging demand; and increasing requirements for PVC used in construction and pipe applications. Mainland China is projected to account for a large percentage of new ethylene demand expected through 2025; a growing middle class, improving living standards, and fast-developing infrastructure is driving significant ethylene demand growth.
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