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Viewpoint: US ethylene to lengthen in 2018

02 Jan 2018 12:00 GMT
Viewpoint: US ethylene to lengthen in 2018

Houston, 2 January (Argus) — The US will be fundamentally long on ethylene as new projects coming on line add a 17-24pc increase in capacity in 2018.

Investment decisions made four to five years ago will come to fruition next year, as between four and six new world-scale ethylene crackers are scheduled to come on line. Indorama is restarting a 375,000 t/yr mothballed cracker in Lake Charles, Louisiana, and Chevron Phillips Chemical's new 1.5mn t/yr Cedar Bayou cracker on the Texas Gulf coast is slated to ramp up shortly, as is ExxonMobil's new 1.5mn t/yr Baytown, Texas, cracker. Formosa's new 1.2mn t/yr cracker at Point Comfort, Texas, is also coming on line at the end of this year.

That 4.6mn t/yr in additional capacity could increase by another 2mn t/yr by the end of 2018 as Shintech's 500,000 t/yr cracker in Plaquemine, Louisiana, and Sasol's 1.5mn t/yr cracker in Lake Charles loom.

US ethylene capacity currently stands at 29.75mn t/yr.

New capacity is ramping up faster than derivative projects designed to consume it. Around 1mn t/yr of new polyethylene (PE) capacity of differing grades at three different sites is slated to come on line in 2018, up by 5pc from the current PE capacity of roughly 19mn t/yr. New PE production is aimed at sending more material to key demand centers in Asia.

Based on the projected oversupply of ethylene, the forward curve is showing a backwardation starting in mid-2018. At the same time, participants are expecting announcements from either Enterprise Products Partners or Odfjell regarding rival ethylene export terminal projects in the first quarter. Both terminal operators are seeking customer support.

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