The blog spent a fruitful afternoon last week, going through ICIS news reports of cracker start-ups in the Middle East and China. The chart above is the fruit of its labours, which shows that 4.8MT of ethylene capacity started up last year in the ME, and 2.1MT in China. Whilst latest estimates suggest that another 3.3MT will start up this year in the Middle East, and 3.95MT in China.
The problem, of course, is that these new capacities are starting up with demand much reduced versus the growth levels seen in the 2003-7 Boom period, when these plants were planned. And, of course, other crackers are also starting up in Asia and elsewhere. Thus global Operating Rates are likely to be c80% level this year, unless demand suddenly improves.
But not all regions will run at this average rate. The blog’s view is that both the ME and China will run at maximum rates – the ME due to its cost advantage with gas-based feedstocks, and China because of national energy policy. Thus NEA ex-China and SEA will find it very difficult to run at the global rate, as their exports to China are reduced.