The recent shift in global crude oil market dynamics and changes in the energy markets in North America have dramatically changed the competitiveness between different regions. The current advantage of ethane-based production in North America is expected to last past the middle of the decade. Natural gas prices in the U.S. are expected to remain low compared to crude oil prices. Crude oil prices are forecast to increase as global consumption increases with demand in developing economies. Natural gas prices are expected to remain lower due to ample supplies from new shale fields located within the U.S. market. This dynamic is expected to keep the spread between ethane and other feedstocks (whose values are more closely tied to crude oil) at a higher level. In addition, ethane supplies in the U.S. market will remain strong, as much of the new shale gas has very high ethane content. This will keep ethane prices closer to BTU values as the domestic ethane supply/demand balance remains well supplied, if not slightly long. The advantaged ethane cracking position (relative to naphtha cracking) in North America will allow ethylene derivatives integrated with ethane steam crackers to compete with other net exporting countries that are heavily dependent upon naphtha cracking for ethylene production.
This paper will give CMAI’s current forecast of the olefins markets, both globally and in North America, with insights into how changes in feed slates will impact these markets.
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