EUROPEAN PLASTICS NEWS
Published: July 23, 2014 1:00 pm ET
Updated: July 23, 2014 1:03 pm ET
Image By: IHS Chemical
Nick Vafiadis
A new IHS Chemical report on global spending for chemical production predicts capacity additions will peak in 2014 at $120 billion and then will begin to decline.
IHS forecasts that beyond 2020 Asia will remain the leader when it comes to global chemical supply and demand, but it will lose some business as some capacity additions shift to the U.S. 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 U.S. to peak at more than 15 million [metric tons] in 2017, accounting for about 20 percent of the world’s additions,” he said.
“From 2013 to 2018, China is going to add 9 million metric tons 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.” | 
