The Ethane Forecast 2023 is FGE’s detailed assessment of the mid-to-long-term operating environment for the global ethane trade. In this recently updated study, we forecast ethane demand and review the changing global supply dynamics of ethane to identify the key factors at play in the rapidly evolving ethane market.
The ongoing global growth of ethane cracking capacity will continue to drive global ethane trade, with the USA remaining the world’s biggest supplier. Much of the incremental planned and proposed new capacity, including a number of projects on the Chinese mainland and in Europe, is predicated on the expected growth of US supply and exports of ethane through the 2020s.
With US shale oil and gas recovering from the prolonged impact of COVID-19, and the war in Ukraine forcing policymakers to rethink the notion of energy security, US natural gas/LNG appears to be a winner, for now.
The weak global petrochemical market last year resulted in more players expressing interest in importing ethane as feedstock. The price of ethane, which currently closely tracks the US Henry Hub natural gas benchmark price, continues to offer competitively priced feedstock for import-dependent crackers compared with LPG and/or naphtha.
The increasing global requirements for US ethane are expected to see at least an additional 250 kb/d of US ethane exports by the late 2020s. How will the economics of merchant ethane crackers fare following this huge rise in ethane demand? Will a shift in US energy policy and production economics be able to support the global ethane trade through the 2030s?
If not, what new destinations for US ethane exports might emerge in the future? Maybe the Middle East in order to keep pace with this growth in demand? And what is the status of the orderbook for Very Large Ethane Carriers (VLECs)?