Engineering News

Asia to remain chemical giant but faces rise in costs
23 July 2014

US-based IHS Chemical has produced a report on global spending on chemical production.

The company states that it predicts global spending on chemical production capacity additions will peak in 2014 at $120bn (€88.2m) and then will begin to decline.

IHS predicts that beyond 2020 Asia will remain the leaders when it comes to global chemical supply and demand, but it will lose some business as some capacity additions shift to the US and Middle East due to lower cost feedstocks – partly due to unconventional shale energy.

“Asian producers are starting to feel the effects of an economy that is growing more slowly, but also the impacts of the feedstock cost advantages that their competitors enjoy in the Middle East and in North America. In response, Chinese chemical producers are adding coal-based capacity to take advantage of the one low cost feedstock they have,” said Russell Heinen, director of technology and analytics at IHS Chemical.

Heinen points out that capacity additions in North America are increasing: “We currently expect capacity additions in the US to peak at more than 15 million tonnes in 2017, accounting for about 20% of the world’s additions,” he said.

“From 2013 to 2018, China is going to add 9 MMT of domestic polyethylene capacity alone, which is significant,” said Nick Vafiadis, senior director, global olefins and plastics at IHS Chemical.
“Equally significant is the fact that much of this new production capacity will be quite competitive on a cash-cost basis due to advances in coal-to-olefins technologies.”

Source: Euorpean Plastics News

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