Spot ethylene prices in Europe peaked in July 2008 at $1,807 a tonne, before plummeting to a low of $510 a tonne in January 2009. There has been some recovery, with prices reaching $1,000 a tonne in September, raising hopes in the industry for growth next year.
But in 2010, Middle East petrochemicals producers will have to tackle the thorny issue of oversupply. The Gulf region in particular has several major petrochemicals projects under construction that are due on stream next year. A further 15 million tonnes a year of ethylene capacity will be added in 2010, and producers will be looking for export markets for this new stream of products.
Much of the Gulf’s production is exported to Asia, most notably China, where demand has improved after a difficult first half of the year. While the Chinese economy is picking up, Beijing has drawn up regulations to try to prevent Gulf producers flooding the market with cheap petrochemicals, in a bid to protect its domestic industry.
In response, Gulf producers are lobbying hard to have these anti-dumping rules lifted. The petrochemicals industry looks set to be dominated by politics in 2010.