Nexant Releases Polyolefins Forecast

The chemical consultancy Nexant has released its market forecast for polyolefins. A few main points: Demand for polyolefins—polypropylene and various kinds of polyethylene—decreased only 0.14% last year despite a 2.1% decline in the global GDP. Nexant estimates polyolefins demand last year was 111 million metric tons. Nexant forcasts linear low-density polyethylene will grow at a 6.2% rate through 2015 while polypropylene and high-density polyethylene consumption increases at 5.7% and 5.5%, respectively.
One neat thing about Nexant's forecast that you can see from the graph is that there is a lull in demand growth towards the end of the decade. Nexant must have an economic downturn in its model. Most forecasts that you see around the chemical industry don't seem to build in future downturns and thus forecast growth as as straight trendline. Working in a slowdown, like Nexant does, is more realistic, given that recessions occur every eight to ten years. 7 million tons of capacity came onstream in 2009. Nexant expects 9 million tons of polyethylene and 6 million tons of polypropylene capacity will come online in 2010. Most of the new capacity will start up in the Middle East and Asia. The onslaught of new capacity will reduce operating rates for existing polyethylene players.

Author: Alex Tullo

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