Light Olefins Demand in Europe and Middle East is Expected to Grow in Forecast Period at a CAGR of 3.4%

Monday 20 February 2012, Amsterdam

The research presents detailed analysis and forecasts of the major economic and market trends affecting the light olefins market in Europe and Middle East. The report covers demand, production analysis and forecasts, drivers and restraints, end use analysis and forecasts, and market share analysis of the major producers in the major regions in Europe and Middle East. In addition, it includes demand and production analysis and forecasts for the major countries in all regions of Europe and Middle East. The report also contains the historic and forecasted price trends for the major countries. Overall, the report presents a comprehensive analysis of the light olefins market in Europe and Middle East, covering all the major parameters.

Light Olefins Demand in Europe and Middle East is Expected to Grow in Forecast Period at a CAGR of 3.4%

The light olefins market in Europe and Middle East has seen a rapid increase in demand over the past decade. The demand light olefins by volume increased from 28.7 million tons to 41.8 million tons between 2000 and 2010, with a CAGR of 3.8%. The increase in demand came mainly from Iran and Saudi Arabia, with noticeable growth also occurring in Russia.The demand for light olefins in Europe and Middle East is expected to increase with a CAGR of 6.2% during the period 2010-2020, to reach around 76.1 million tons by 2020. The majority of demand is again expected to come from Iran and Saudi Arabia, with the result that demand in Europe is expected to see a lower growth rate than that seen in Middle East. The following figure illustrates the demand for light olefins in Europe and Middle East from 2000 to 2020.

See figure: Light Olefins, Europe and Middle East, Demand, Million Tons, 2000-2020

On Purpose Production Technologies for Propylene May Ease Supply Shortage

Propylene is currently produced as a byproduct of ethylene in the cracking process. But using different feedstock provides a different mixture of products. In the last few years, the changing nature of feedstock used in cracking plants has changed the dynamic of the industry. The new feedstock used provides higher ethylene content in the product mixture than the traditional feedstock. This has resulted in decreasing propylene supply growth across the globe. At the same time the end-use markets for propylene have shown greater growth than the end-use markets for ethylene, causing greater demand growth for propylene than for ethylene. The combination of increased demand growth and reduced supply growth is widening the demand/supply gap in the propylene market. All over the globe, the producers are working on technology specifically designed to produce propylene, which may provide comparable or even cheaper propylene than that produced as a byproduct in cracking for ethylene. Unfortunately, to date, there has ben no announcement of cheaper or comparably-priced production of propylene using any specifically-designed technology. These technologies may fill the demand/supply gap if and when implemented.

Middle Eastern Countries to Drive the Demand for Light Olefins in Europe and Middle East

The demand for light olefins in Europe and Middle East increased from 28.7 million tons in 2000 to 41.8 million tons in 2010, with a CAGR of 3.8%. This growth in demand mainly came from Middle Eastern countries Iran and Saudi Arabia. Industrialization in these two countries has been accompanied by a rapid increase in the demand for light olefins, with the result that they held a collective share of 49.5% of the light olefins demand in Europe and Middle East in 2010. In future, the demand for light olefins is expected to come mainly from Iran and Saudi Arabia. Every European country is expected to lose its demand share to Middle Eastern countries due to comparatively slower demand growth for light olefins. Iran and Saudi Arabia are expected to account for around 66% of demand for light olefins in Europe and Middle East by 2020. The following figure illustrates the demand for light olefins in Europe and Middle East from 2000 to 2020.

Consistent Growth in the Packaging Industry is Expected to Drive the Global Light Olefins Market

The packaging industry dominates the demand for light olefins across the globe, and consumes more than half of the polymers produced from light olefins. As packaging is primarily used in the retail industry, the growth of that industry across Europe and Middle East has corresponded with an increased demand for light olefins. Polymers produced from light olefins are primarily used for the packaging of food, beverages and non-food items. These polymers are also used for the packaging of many household products. Many acids, detergents, bleaches and other chemicals also require packaging. The use of polymers produced from light olefins in packaging is expected to continue until the end of the forecast period (2020), with that industry’s share of demand also expected to continue to increase. The construction, automotive and electrical industries are the other major industries consuming light olefins across the globe.