FGE's detailed assessment of the mid/long-term operating environment for the global ethane trade. In this multi-client study, we forecast ethane demand and review likely incremental supplies to identify the most crucial factors at play in the rapidly evolving ethane market.
Growth of ethane cracking capacity globally will continue to drive the global ethane trade, with US as the sole supplier of the market. Much of the incremental planned and proposed capacities, including over a dozen proposed projects on the Chinese mainland have been predicated on the growth of US supply and exports of ethane through the 2020s.
Much is up in the air at this point with US shale production taking a hit from a low oil price environment because of the COVID-19 outbreak. With over 10 mmtpa of ethane cracking capacity in the pipeline in the US Gulf Coast and North East, how will the pricing of ethane evolve with the rapid reduction in ethane rejection expected with these units coming online?
In addition, upcoming projects in China, Belgium and Mexico are expected to pull an additional 3 to 4 mmtpa of US ethane by 2025. How will the economics of merchant ethane crackers look like with this massive swing in ethane demand? Will US production economics be able to support the global ethane trade through the 2020s and beyond? With bigger Very Large Ethane Carriers (VLECs) being ordered in the shipyards, will there be new entrants who will come into the fold?
Besides the growth of butane use in the petrochemical sector in East Asia, butane is increasingly used as gasoline additive. Driven by stringent emission standards to curb air pollution, China is emerging as a key growing market for processed butane as gasoline additives.