Shift on the Ethylene Market Shale Gas Fuels US Ethylene Production

Editor: Dominik Stephan

While the growth of Asia's ethylene market slows down, the US cashes in on their shale gas boom: The availability of huge volumes of cheap ethane in the states “makes ethylene production highly attractive,” an analyst says.

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Shale gas makes the US the shooting star of ethylene
Shale gas makes the US the shooting star of ethylene
(Picture: PROCESS)

The overall picture shows a slight increase of the ethylene markets, driven by Asian projcts and fueled by US gas. The global market for ethylene could reach US $ 177.83 billion by 2017, climbing from US $ 131.88 billion in 2012 at a Compound Annual Growth Rate (CAGR) of 6.2%, new figures by Global Data indicate. According to the analysts latest report the Asia-Pacific region will drive the ethylene industry, with its own market expected to increase from $50.59 billion in 2012 to $71.63 billion by 2017, at a CAGR of 7.2%. North America will rank just behind, growing from $37.78 billion in 2012 to $46.61 billion by 2017, at a CAGR of 4.3%.

Less Expensive Ethane from the US ‘Makes Ethylene Production Highly Attractive,’ Says Analyst

Additionally, Asia-Pacific will continue to be the largest region in terms of capacity addition, growing from 49.67 million tons per year (MMTY) in 2012 to 67.40 MMTY by 2017, at a CAGR of 6.3%. Furthermore, due to heavy investment from petrochemical companies, the US capacity addition is forecast to witness a significant boost, jumping from 27.17 MMTY in 2012 to 36.49 MMTY by 2017, at a CAGR of 6.1%.

Ashok Pant, GlobalData’s Senior Analyst covering Chemicals, says: “Less expensive ethane derived from US wet shale gas makes ethylene production highly attractive, and drives large scale capacity additions.

“Firms such as The Dow Chemical Company, Chevron Phillips, Exxon Mobil and Royal Dutch Shell are betting on the US becoming increasingly competitive, and are constructing ethane crackers to produce cost-advantaged ethylene.”

Global Ethylene Market to Climb to US $ 177.83 Billion by 2017

With regards to Asia-Pacific’s dominance in the ethylene market, Pant says that there are two main reasons for the historical growth: insatiable demand from China’s large and growing population for polyethylene and ethylene oxide, and the country's resilient economy during the recession. The Asia-Pacific region also boasted a relatively faster post-recession recovery time, causing minimum demand loss.

The major sectors that consume ethylene are polyethylene, ethylene oxide, ethylene dichloride and ethylbenzene. These industries accounted for a massive 94% of global consumption in 2012, according to GlobalData.