World Olefins Industry

Produced by Kieran Cosgrove

October 2015

OUTLOOK

demand, with capacity investment spiralling throughout the

region - particularly in China and India. Since 2010, 70% of
incremental olefins capacity gains have been in Asia.

What a difference a year makes in the olefins industry.

In mid-2015, various factors are weighing on the minds
of industry players: capacity, feedstock, competition,
demand, supply, technology, investments, crude and
margins. This mixed picture presents both good and
bad news, with opinion split on the outlook of olefins
for the short-, medium- and long-term.

Global Incremental Capacity 2010-2015

Rest of World
19%
North America
7%

Recovering Olefins Demand

Since the recession of 2008-2009, petrochemicals markets
have been somewhat dislocated. The olefins recovery in
2010 was exaggerated, as was growth in 2013. However,
global olefins demand growth of late has trended lower
relative to GDP growth; current forecasts indicate that this
will continue as the trend line narrows.

Asia
74%

Source: ICIS Supply and Demand Database

Global Olefins Demand

Historical and Projected Growth

%
6

Currently, this capacity increase is being sustained by

the coal-to-olefins (CTO) and methanol-to-olefins (MTO)
movement. For a number of years, WPI-Olefins has
indicated that planned projects were unlikely to proceed
and that project schedules would slip. However, so far this
has failed to transpire. Although CTO and MTO currently
represent less than 2.5% of global olefins supply, by 2020
this will rise above 5%, reaching 7% by 2025 and 9%
by 2030.

5
4
3
2
1
0

Global Olefins Supply

2005-2013

2013-2014
GDP
Ethylene

2014-2015
2015-2018
Propylene
Butadiene

2018-2030

Source: ICIS Supply and Demand Database

However, suppliers have to look on the bright side. Global

olefins demand exceeded 238m tonnes in 2014, the
increase of 3% relative to 2013 representing 7m tonnes.
Despite the global whirlwind of political, financial and
economic factors, our initial estimates suggest that this
level of growth can be achieved again in 2015.
Demand growth in 2014 was split almost equally between
ethylene and propylene, with a small contribution from
butadiene. Looking ahead, forecasts suggest global
ethylene demand growth will be 3.5-4.0% per annum, 4.04.5% for propylene, and 3.5% for butadiene a positive
outlook considering the current petrochemical climate.

Growing Global Capacity

While a steady growth in demand is a good sign for
industry players, concerns of potential oversupply are
never far away. Asia now represents 44% of global olefins

100%

80%

60%

40%

20%

0%

2020

2025

CTO-MTO

2030

Gas-to-olefins

Source: ICIS Supply and Demand Database

However, Asia is not the only region investing in olefins.

The next 18 months will see a spurt of investments in North
America materialise, enabling the region to maintain a 23%
share of global olefins capacity. New initiatives continue
to appear, although the collapse in global crude prices
has prompted a review of many planned projects. Despite
feedstock availability, many propane dehydrogenation
projects are at risk of cancellation. Meanwhile, those

Copyright 2015 Reed Business Information Ltd. ICIS is a member of the RELX group.
ICIS accepts no liability for commercial decisions based on the content of this report.

World Olefins Industry Outlook

Produced by Kieran Cosgrove

October 2015

ethylene derivative investments that are on track for

start-up will be coming to market during a period of great
uncertainty.
Growing capacity is hardly surprising when you look at
margins. By all accounts, margins have gone through the
roof of late, particularly for producers in Europe and the
US. Although short-term factors have driven costs down
in Europe, in the long-term good margins could create
more competitive conditions. Provided they have the right
structures in place, some companies will do very well over
the coming years.

Interregional Trade in Monomers

Thousand Tonnes
3000
2500
2000
1500
1000
500
0

Shifting Feedstocks

2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Ethylene

The shift to a lighter olefins feedstock slate is now well

established. In 2015, 53% of global ethylene from steam
crackers will be produced from light feedstock. This is
a significant increase from 10 years ago, where light
feedstock accounted for 40% of production; the figure is
set to increase towards 60% in the next 10 years. Although
regional variations are inevitable, it is clear that Europe and
Asia (traditionally heavier feedstock regions) are contributing
towards this shift.
This trend has major implications for co-product supply.
Propane dehydrogenation has become a go-to solution in
China, the US and now Europe. What is more, forecasts for
regional imbalances are now appearing; potential supply,
supplemented by refinery-based propylene output, could
well exceed the demand outlook in China and the US.

Propylene

Butadiene

Source: ICIS Supply and Demand Database

What About Butadiene?

Butadiene certainly has not been forgotten. As demand
growth eases, industry players are left with two burning
questions. How will the shift in the olefins feedstock slate
impact supply? And, where is the gap for new on-purpose
supply? WPI-Olefins indicates that there will be sufficient
feedstock supply to meet butadiene demand requirements.
However, in terms of outlets for production, China is
currently the only country offering any real opportunities for
suppliers.

The outcome will be increased interregional trade,

especially for ethylene derivatives, which will already
exceed 40m tonnes in 2015 and are expected to reach
50m tonnes by 2020. Although the prospective change
for propylene derivatives is somewhat lower, this too is
expected to increase over the next five years, from 19m
tonnes in 2015 to 22m tonnes by 2020.
Interregional Trade in Derivatives
(in Monomer Equivalent)
Million Tonnes
70
60
50
40
30
20
10
0
2005

2007

2009

2011

Ethylene Derivatives

2013

2015

2017

2019

2021

Propylene Derivatives

2023

2025

2027

2029

Butadiene Derivatives

Source: ICIS Supply and Demand Database

Copyright 2015 Reed Business Information Ltd. ICIS is a member of the RELX group.
ICIS accepts no liability for commercial decisions based on the content of this report.

World Olefins Industry Outlook

Produced by Kieran Cosgrove

October 2015

Tools to help you plan effectively for the future

ICIS ANNUAL STUDIES
ICIS Annual Studies provide you with detailed analyses of global, regional or country-specific markets, as well as forecast
data and commentary to support your strategic planning in the medium-to-long-term.

ICIS World Petrochemical

Industry Study on Olefins

China Olefins
Annual Studies

A comprehensive analysis of the past and future

development of ethylene, propylene and butadiene (C4s)
and their respective derivatives. It looks at demand
growth, production, capacity developments, interregional trades in monomer and derivatives, monomer
surpluses or deficit s, and country-by-country supplydemand balances. The outlook and forecasts given are
up to 2030.

These reports help you gain visibility on developments

in ethylene, propylene and butadiene in China, including
the coal-to-olefins (CTO) production technology. The
studies review the past years performance and forecast
the following years supply and demand scenario.

Enquire about the World

Petrochemical Industry Study on Olefins
www.icis.com/wpi-olefins

Enquire about the

China Olefins Annual Studies
www.icis.com/olefins_china

Supply and Demand Database

This is the data used for the World Petrochemical Industry Study on Olefins. The Supply and Demand Database
gives you end-to-end perspective across the global olefins supply chain, enabling you to piece together the local or
regional scenario against the global context. Data includes import and export volumes, consumptions, plant capacities,
production, and product trade flows from 2005 up to 2025 by product, country and region.
Request a one-to-one demo
www.icis.com/sdd-demo

Kieran Cosgrove
Senior Consultant, Global Olefins & Derivatives, ICIS Consulting
Kieran has been involved in both upstream and downstream consulting activity for over
25 years and currently leads the ICIS petrochemical team based in Italy. He sees a
natural synergy between market reporting, price- finding and his expertise on supplydemand analysis.
A major task involves maintenance and development of the main databases recording
the historical and projected developments of the global petrochemical industry and
which form the basis of the companys multi-client activity. In recent years his efforts
have focused on the olefins and derivatives sectors. Separately, his wide-ranging
experience has developed through specific client-based studies which include advising
North American chemical companies on global investment opportunities, in helping
management consultancies with in-depth analysis of the petrochemicals landscape,
and with international energy companies in their long-term strategic planning.
More recently, Kieran has been a key speaker at ICIS conferences.

Copyright 2015 Reed Business Information Ltd. ICIS is a member of the RELX group.
ICIS accepts no liability for commercial decisions based on the content of this report.