EPCA Seminar: Olefins Outlook: 9 October 2020
EPCA Seminar: Olefins Outlook: 9 October 2020
EPCA Seminar: Olefins Outlook: 9 October 2020
9 October 2020
2
EUR/tonne
0
200
400
600
800
1000
-200
Jan-00
Jul-00
Jan-13
Jul-13
Entering 2020 | Expectations of a “tumultuous year”
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Trendline
Jan-18
Jul-18
Jan-19
Jul-19
Jan-20
Olefin Demand | Real term demand loss
Global Ethylene Demand (2000-2025) Global Propylene Demand (2000-2025)
200 200
180 180
160 160
140 140
Million tonnes
Million tonnes
120 120
100 100
80 80
60 60
40 40
12
10
8
MMTPA
-2
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
NORTH AMERICA NORTH EAST ASIA ASIA AND PACIFIC MIDDLE EAST REST OF WORLD
90%
89% 82%
88%
80%
87%
86%
78%
85%
84%
76%
83%
82% 74%
81%
80% 72%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
5
MMTPA
-1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
STEAM-CRACKING REFINERY GAS PROPANE METATHESIS MTO/CTO OTHERS
1600
Ethylene Cost of Production (USD/tonne)
1400
1200
1000
800
600
400
200
0
0 20 40 60 80 100 120 140 160 180 200
Cumulative Ethylene Capacity (Million tonnes)
1600
Ethylene Cost of Production (USD/tonne)
1400
1200
1000
800
600
400
200
0
Cost curve for January 2020
0
1000
-200
200
400
600
800
03-Jan-20
10-Jan-20
03-Apr-20
10-Apr-20
17-Apr-20
24-Apr-20
01-May-20
08-May-20
15-May-20
North East Asia Naphtha
22-May-20
29-May-20
05-Jun-20
12-Jun-20
19-Jun-20
26-Jun-20
USG Ethane
03-Jul-20
10-Jul-20
17-Jul-20
24-Jul-20
31-Jul-20
07-Aug-20
14-Aug-20
21-Aug-20
28-Aug-20
North East Asia MTO
04-Sep-20
11-Sep-20
18-Sep-20
25-Sep-20
02-Oct-20
Ethylene Cost Curve | European producers move to the right
1600
1400
Ethylene Cost of Production (USD/tonne)
1200
1000
800
600
400
200
0
0 20 40 60 80 100 120 140 160 180 200
Cumulative Ethylene Capacity (Million tonnes)
Jan-20 (64 USD/bbl) Apr-20 (20 USD/bbl) Oct-20 (42 USD/bbl) Δ European producers
Source: ICIS Analytics
Conclusions
• Real term demand loss has occurred, with current estimates showing between one and
two years of lost growth for ethylene and propylene respectively
• Olefin demand has not fallen as much as GDP alone might imply, effects have not
been spread evenly between industry sectors and regions, understanding end markets
remains key
• While some projects have seen delays, those with steel in the ground are proceeding, and
we expect to see length increasing through 2021
• Operating rates have seen significant decreases in 2020 and are expected to remain
low through much of the decade, capacity rationalisation will be one factor in determining
the rate of bounce back
• Global competitiveness between olefin producers has increased in a low oil price
environment, reducing the advantage for producers at the low end of the cost curve and
those who might be export focussed
Thank you
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