Polyethylene, Mono Ethylene Glycol, Polycarbonate are expected to gain some momentum
BBN-Riyadh
RIYADH: The current year 2024 is nearing its mid-way point. Will this year remain to be a challenging year for the petrochemical industry?
The global petrochemical major, Saudi Basic Industries Corporation (SABIC), one of the largest global players in the petrochemical industry, believes 2024 will remain as a tough year.
“The global operating rates will not recover to the pre-2020 levels,” the petrochemicals major said in its 2023 integrated annual report.
Though the demand for petrochemicals is expected to rise slightly in Asia this year, growth in Europe is expected to remain subdues. Notwithstanding the fact that new capacity additions are still planned, the large wave of capacity expansions will slow down in the coming years.
The report noted that capacity idling or closures by the industry seems unavoidable in order to increase operating rates from an all-time low.
PE, MEG to gain momentum
However, Polyethylene (PE), Mono Ethylene Glycol (MEG) and Polycarbonate are expected to gain some momentum this year as the capacity extensions will be more in line with demand growth and operating rates are expected to stabilise or slightly increase.
On the other hand, the polypropylene market will likely start recovering next year as capacity extensions continue throughout 2024.
The Middle East (ME) and the US will remain the largest exporters of PE and MEG due to their cost advantage, the report said.
The report noted that the end of 2022 saw the global petrochemicals market in a difficult situation due to the capacity wave leading to the lowest-ever operating rates in combination with weaker-than-expected demand growth and the trend continued in 2023.
In general, petrochemical prices were relatively stable throughout 2023, although at low levels, and followed the feedstock price developments, SABIC stated.
It underlined that Asia fell short of expectations as the economic rebound after China’s lockdowns in the previous year didn’t fully materialise.
Since 2020, China has dominated the growth of ethylene and derivatives capacity, which remained high in 2023, but it is expected to slow down in the coming years.
