Since the second half of this year, there are still a number of new cracking units in the United States. In this case, the oversupply situation in the US ethylene market will continue until the end of 2018, during which raw material costs have risen sharply or support ethylene prices have rebounded slightly.
With the new cracking unit and new downstream derivative units being put into production, the US ethylene production exceeded the consumption in the first half of this year. Since the end of 2017, the new ethylene production capacity in the US has been about 3 million tons/year. The production capacity is about 3.5 million tons / year. However, the new production of cracking units quickly reached full capacity, and some new production of polyethylene equipment has been continually affecting ethylene consumption.
This imbalance has caused an oversupply in the US ethylene market, which has caused ethylene prices to continue to fall. The US ethylene spot price fell to 12~12.5 cents/lb in mid-May this year, the lowest since January 1999. Ethylene The contract price fell to 26 cents/lb in May, the lowest level since February 2016, when the price was 25.75 cents/lb.
Affected by the rising cost of raw material ethane and the slight improvement in market oversupply, US ethylene prices subsequently rebounded slightly. Most newly-produced polyethylene units have gradually increased capacity utilization and improved ethylene consumption. At the same time, they were cracked. Ethylene production decreased as a result of plant shutdowns and the impact of a set of crackers. In June, the US ethylene contract price was increased by 0.5 cents/lb from May. In June, the US ethylene spot price was also lower than the mid-May. Some rebound.
However, market sentiment has been depressed again recently, as two new crackers are expected to be put into production. ExxonMobil's new 1.5 million t/y cracker in Bay City, Texas is currently in trial production and is expected to be officially put into production soon. In Dorama's idle cracker is undergoing expansion and expansion, and the capacity after expansion will reach 440,000 tons/year. The plant is expected to be put into operation in July and will reach full capacity in the third quarter.
Since most of the newly-produced polyethylene production capacity is close to full-load production, there is almost no room for consumption to fully absorb the new ethylene capacity. Anxun expects that the US ethylene spot price will remain near the production cost, and the contract price should be based on Spot price and production cost are considered together.
According to sources, the US ethylene market will not be rebalanced by the end of 2018 or early 2019, when some new ethylene derivative units will be put into operation, and the total capacity of ethylene downstream equipment including polyethylene, PVC and ethylene glycol units will be total. Up to 3.6 million tons per year. However, ethylene supply may remain excessive, as four new cracking units will be put into operation in the United States at the end of 2018 and early 2019, with a total ethylene production capacity of 4.25 million tons per year.
While new capacity is being put into production to put downward pressure on ethylene prices, new raw material demand is expected to push up the price of upstream ethane. In the past year, US ethane prices have doubled from 17 cents per gallon to 34 cents/gal. Ethylene prices have fallen while the rising cost of ethane feedstock has further squeezed US ethylene production profit, which may cause the cracker to reduce production or turn to cracking heavy feedstock. Cracking heavy feedstock will produce less ethylene. , increase the output of by-products such as propylene and butadiene.