in the propylene market, which faced additional pressure due to increased supply as various propane dehydrogenation process (PDH) units in several countries in Asia ramped up production in response to rapidly falling propane prices, expanding supply in Asia. In Q4, pressure persisted due to a continued slump in demand. This, coupled with high feedstock prices and production costs and the low ethylene/propylenenaphtha spread, prompted producers in Asia to reduce output and control production. However, capacity expansion in Asia continued on in Q4, with approximately 1 million tons added to the ethylene market and 2.8 million tons to the propylene markets, causing the average ethylene and propylene prices in Southeast Asia in 2023 to slide to US$ 889 and US$ 858 per ton, respectively, while the ethylene-naphtha and propylenenaphtha spreads dropped to US$ 240 and US$ 209 per ton, respectively. Market Forecast for 2024 As for the ethylene and propylene market in 2024, the demand is projected to see limited recovery in the first half of 2024, dampened by the continued economic slowdown from the previous year. However, the economic outlook is expected to slowly improve in the second half of the year thanks to economic stimulus measures, which may contribute positively to the overall ethylene and propylene market. Meanwhile, pressure from continuous capacity expansion will likely persist. An additional 4.9 million tons per year is expected for ethylene production capacity, consisting of 3 million tons per year from China and 1.9 million tons per year from other countries, while propylene production capacity will be expanded an additional 9.7 million tons per year, consisting of 7.9 million tons per year from China and 1.8 million tons per year. Downstream demand is projected to slowly improve thanks to economic stimulus measures and a global economic recovery. As such, the overall olefins prices will likely increase compared to 2023. Market Overview - Intermediates Ethylene Oxide and Derivatives Market Overview in 2023 The mono ethylene glycol (MEG) in 2023 was negatively affected by the economic slowdown and a slower-than expected recovery in polyester demand, while the capacity saw a further expansion of approximately 5.7 million tons per year, or 11% of the current capacity, compared to the previous year, consisting of a coal production capacity of 1.8 million tons per year. The sluggish demand and the expanded capacity prompted a price decline and the necessity to sustained production control, especially with regard to the coalbased capacity, which was less competitive compared to naphtha- or ethane-based production units. As a result, the reference price in China for MEG in 2023 was US$ 488 per tons, a decline of US$ 86 per tons from 2022. Market Forecast for 2024 The MEG market in 2024 is projected to improve, with the demand gradually rallying, particularly in the latter half of the year as economic pressure begins to subside and supports the utilization of MEG in downstream production. The supply is expected to expand by around 2 million tons per year, or approximately 4% of the total capacity. As the added capacity is smaller than the 11% expansion in 2023. As such, there will be less pressure on the supply, and the MEG price will likely show an upward trend. 70
RkJQdWJsaXNoZXIy ODg4NTI=