Americas Light Olefins Market is Expected to Grow Over Forecast Period at a CAGR of 3.4%

Monday 20 February 2012, Amsterdam

The research presents detailed analysis and forecasts of the major economic and market trends affecting the light olefins markets in the region. It also contains information on demand, production analysis and forecasts, drivers and restraints, end-use analysis and forecasts, and market share analyses of the major producers in the major regions of the Americas. In addition, it includes demand and production analysis and forecasts for all the major countries across the Americas, as well as historic and forecast price trends for these countries. Overall, the report presents a comprehensive analysis of the Americas’ light olefins market, covering all the major parameters.

Americas Light Olefins Market is Expected to Grow Over Forecast Period at a CAGR of 3.4%

The light olefins market in the Americas has seen a net decline in demand over the past decade. The volume of light olefins demand decreased from 49.4 million tons in 2000 to 49.1 million tons in 2010, registering a negative CAGR of 0.1% for the period 2000-2010. The US was the only country in the Americas with a net decline in demand over the past decade. However, the dominance of the US in the market of the Americas resulted in a net demand decline for the entire Americas region.

In the future, demand for light olefins in the Americas is expected to increase at a CAGR of 3.4% over the period 2010-2020 to reach around 68.4 million tons by 2020. The majority of the demand is again expected to come from the US, although the countries in South and Central America are expected to grow at a higher rate than the US.

See figure: Light Olefins, Americas, Demand, Million Tons, 2000-2020

Feedstock Dynamics Boosting Growth in the Cost-Effective Ethylene Industry

The traditionally used feedstocks of naphtha and natural gas have not reaped much profit for ethylene manufactures due to a decrease in the spread between naphtha or natural gas and ethylene prices. The main reason for this shrink in spread has been the globally increased competition which the Americas have experienced from Middle Eastern countries, which are enjoying cheap feedstock availability, resulting in increased competition on a global level. In order to combat the increased competition, the markets in the Americas have started developing new ways to reduce the cost of ethylene manufacturing. Following these efforts, the US has started harnessing shale gas in order to produce cheaper ethane, thereby producing cost-effective ethylene. Thus, the changing feedstock dynamics are increasing competitiveness and contributing to the overall growth of the industry.

On-Purpose Production Technologies for Propylene May Ease Supply Shortage

Propylene is produced as a byproduct of ethylene during the cracking process. However, the use of different feedstocks provides a different mixture of products. Over the last few years, the changing dynamics of feedstock in cracking plants have changed the state of the industry. The feedstock currently used provides a higher ethylene content product mixture than traditional feedstock, which has resulted in a decrease in propylene supply growth across the world.

The end-use markets for propylene, meanwhile, have shown greater growth as compared to the ethylene end-use markets. This has resulted in greater demand growth of propylene as compared to ethylene. This increased demand growth and reduced supply growth is widening the demandsupply gap in the propylene market.

All over the world, producers are working on separate technology for propylene which may provide comparable or even cheaper propylene than that produced traditionally as a byproduct during the cracking of ethylene. Unfortunately, to date, there has been no announcement concerning the introduction of cheaper or comparable production of propylene using any on-purpose technologies. These technologies may, however, fill the demand-supply gap easily when implemented.

Consistently Growing Packaging Industry is Expected to Drive the Global Light Olefins Market

Packaging is the dominant industry in terms of demand in the light olefins market, consuming more than half of the world’s polyolefins, which, in turn, dominate the demand for light olefins. Packaging is primarily used in the retail industry and the growth of the retail industry across the globe has increased the demand for light olefins. Polymers produced from light olefins are primarily used for the packaging of beverages, food and non-food items. They are also used for the packaging of many household products, as well as for the packaging of products such as acids, detergents, bleaches and other chemicals. The use of light olefin-produced polymers in packaging is expected to continue past 2020. The demand share of the packaging industry for light olefin-produced polymers, meanwhile, is expected to increase further by 2020. The construction, automotive and electrical industries are other major industries which consume light olefins in the Americas.