According to its latest report “Global Polyethylene Industry—Emerging Markets in Asia-Pacific to Drive Modest Growth,” research and consulting firm GlobalData expects global polyethylene demand to rise by about 3.7% per year between 2013 and 2018. This growth rate is slightly higher than growth during the 2003 to 2013 period, GlobalData said.
The growth is expected to occur in the U.S. and Europe, mostly in Russia, with the U.S. experiencing a 2.4% increase per year, compared to the 0.7% per annum growth from 2003 to 2013, according to GlobalData. Demand in Europe and Russia is expected to grow by 2.8% each year, which is almost three times the growth level seen during the last decade.
Growth rates in Asia will somewhat offset the demand increases in the U.S. and Russia, according to the report, with an increase of only 4.8% per year, compared to the 6% demand rise per year from 2003 to 2013.
“Lower feedstock costs from U.S. 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,” said Carmine Rositano, GlobalData’s managing analyst covering downstream oil and gas. “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,” he continued. “Capacity additions will be most prevalent in the U.S., 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 pace.”
In spite of the lower estimated cost of crude oil in the forward price curve to 2018, GlobalData forecasts that polyethylene prices will rise at about 1.3% per year through 2018. GlobalData attributed this increase to petrochemical demand growing at about three times the rate of oil demand.
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