The global Ethylene Market size was valued at USD 146.3 billion in 2019 and is anticipated to grow at a CAGR of 9.8% during the forecast period. The ethylene industry witnessed an unprecedented change in the overall production routes with the industry now opting for novel ones. The production of ethylene in North America, particularly the U.S. was driven by the large availability of ethane from shale gas. The trend in the Middle East was somehow different than the U.S. with focus being done on development of liquid based crackers integrated fully with the refinery complex prompted due to the less availability of gas to be used for feedstock.
The ethylene market is continuously being tied up and dependent on the overall world GDP growth; due to the rising maturity of the product as well as little or no expansion of its derivatives into newer product avenues. The market, after successful recovery from the 2008-2009 crisis, showed substantial and steady growth in terms of demand from 2015 to 2018, a first in the past few years.
Due to the recent COVID-19 pandemic it can be assumed that some of the projects pertaining to ethylene capacity addition can be delayed beyond 2022. Some may even get delayed further. Tendencies of operators varies according to region. For example, in the middle east, ethylene operators are focusing more on increasing their operational efficiency rather than capacity additions. Poorly positioned assets and operating rate reduction is a cause of concern for North American and Chinese operators, which they are trying to tackle through capacity expansions.
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In regions such as Western Europe, some of the manufacturers of ethylene are banking on the advantages provided by LPG routes of production and are leveraging on the same to increase and maintain their revenue streams. Some of the participants in the region are also working on increasing the flexibility of feedstocks in their naphtha crackers. Asia Pacific countries such as China is increasingly looking at prospects presented by ethane as well as LPG feedstocks for ethylene production while still leveraging on coal for reducing its dependence on imported feedstock.
Usage of ethylene derived products in construction is rise due to inherent advantages such as flexibility, ease of usage, low cost, easy processability, among others. The global construction industry is being driven by strong performance of the sector in countries such as India, China and regions such as Middle East. Pipes, wires, insulations, and other elements of construction are being replaced by plastic counterparts on a large scale. Hence, the booming construction industry is a significant driver for the overall ethylene industry.
The market is primarily segmented on the basis of Feedstock, By Application, By End-Use, and geographic region.
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Based on feedstock the market has been feedstock such as Naphtha, Ethane, Propane, Butane and Other feedstocks. Naphtha feedstock segment emerged as the dominant segment in 2019 and is expected to maintain its dominance over the forecast period. About half of the incremental supply of ethylene across the globe came from ethane feedstock source. However, the capacities of existing Naphtha ethylene plants outpaced that of ethane and other feedstock sources in terms of current production. However, Ethane is expected to witness the highest growth rates over the forecast period mainly driven by additional capacities in Asia Pacific and North America.
Production of Naphtha from ethylene sector has been characterized by continuous research and development activities leading to novel methods and routes of production. SK Corp in partnership with Korea Research Institute of Chemical Technology has developed a process that can produce ethylene and other olefins from naphtha from temperature lower than 700 degree Celsius. The parties involved in the development of the process claim that the overall operations result in reduction of energy requirements by 20% and the reduction of initial investments by approximately 30%.
In terms of application, the market has been segmented into Polyethylene, Ethylene Oxide, Ethyl Benzene, Ethylene Dichloride and Others. Polyethylene dominated the application segment in 2019 and the segment is expected to emerge as the dominant one in 2026 as well. Strong demand from packaging as well as construction industry for Polyethylene are some of the factors benefitting the segment growth. Rising usage of polyethylene as plastic packaging in food & beverage industry, consumer goods industry is benefitting the segment growth.
Acceleration in consumer spending and rising manufacturing activities have benefitted the global growth of the polyethylene demand across the globe. Easy processability of the plastic, comparatively low cost, ability to get recycled and versatility are some of the factors that have made polyethylene the preferred choice in many applications. Moreover, recent development concerning feedstocks of ethylene have resulted in polyethylene experiencing certain cost advantage over other substitutes.
On the basis of end-use, the market has been segmented into Building & Construction, Automotive, Packaging, Textiles, Agriculture & Agrochemicals and Others. Packaging industry emerged as the largest end-use segment in 2019 and in terms of revenue, is expected to grow at a estimated CAGR of 10.1% over the next six years. Strong demand for packaging industry across the globe due to the recent Corona pandemic is expected to benefit the demand.
Construction industry has grown tremendously in regions such as Asia Pacific, due to huge activities in countries such as India and China. Rapid urbanization in these countries, huge population and increased government spending on construction are some of the reasons favoring the segment growth. These trends are in turn expected to drive the growth of ethylene-based products for usage in construction industry.
Asia Pacific emerged as the largest market in 2019 and this trend is expected to continue till the end of the forecast period. The demand is mainly driven by China. Polyethylene is a major consumer of the overall Ethylene production. The product finds wide applications in other end user industries such as construction as well as automobile among others. These end use industries have a significant presence in China as well as in other countries such as India, Indonesia, Vietnam and Malaysia. All these factors are expected to significantly boost the overall Asia Pacific Ethylene market growth.
It is anticipated that the region will witness narrowing of price gap of ethylene between the regions of Northeast Asia and Southeast Asia. The reasons for this narrowing of gap are the proposed capacities in Northeast Asia that are most likely to fulfill the rising demand in the region, overall slow economic growth of China, and exports from the new U.S. terminal. Confinements and plant closures especially in China on the backdrop of Corona Virus outbreak are bound to hamper the supply in the country. Strong demand from India as well as China are driving the regional market growth.
Market participants, especially the GCC companies are making significant investments in the U.S. as well as China. In China, GCC companies have set up production facilities in Fujian, Panjin, and Zhejiang. GCC producers in North American region include ExxonMobil and SABIC’s Texas Ethane Cracker, Saudi Aramco’s Port Arthur Petrochemical plant, and consortium of GCC players including Total, Nova Chemicals / Borealis’s Texas Petrochemical Plant.
Companies such as ExxonMobil Corporation., Dow Dupont, Royal Dutch Shell plc, Saudi Basic Industries Corporation (SABIC), Total S.A., AkzoNobel, China Petroleum & Chemical Corporation, Huntsman Corporation., LyondellBasell Industries., Clariant are some of the key players operating in the industry.