Ethylene Markets Slammed by Middle East Conflict, Strait of Hormuz Closure

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Written by Devendra Singh Bhati for IIR News Intelligence (Sugar Land, Texas)

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Summary

Industrial Info Resources is tracking a number of unplanned ethylene shutdowns in the Middle East caused by the ongoing conflict.

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Conflict, Blockade Rocks Ethylene Production

According to Industrial Info Resources data, there are unplanned ethylene production outages at 24 petrochemical plant units in the Middle East that have been caused by the ongoing conflict. Subscribers to Industrial Info's Global Market Intelligence (GMI) Offline Event Database can view the detailed outage reports here. Industrial Info Resources also is tracking 118 active capital ethylene-related projects in Iran and other Middle Eastern counties, worth US$42.33 billion.

Since March, the regional industry has suffered due to the conflict in the Middle East. During the Israeli-U.S. war with Iran, several facilities sustained significant damage and were forced to reduce production or shut down completely. Some facilities suspended operations when their feedstock (natural gas) or utilities were affected. Later, the closure of the Strait of Hormuz aggravated the situation, as it blocked exports from some Gulf countries.

Ethylene is one of the most valuable chemicals in the petrochemical industry. It is primarily used to produce polyethylene, ethylene glycol and styrene, which are essential for packaging, construction, consumer goods, textiles, automotive and manufacturing. Due to its extensive applications and high demand, ethylene production is often considered a strong indicator of industrial and economic activity worldwide.

The Middle East is an attractive location to produce ethylene and its derivatives due to the abundance and low cost of ethane gas feedstock. The region makes up 12-15% of the global ethylene capacity. There are 44 operational plants in the region, which annually produce 37 million metric tons of ethylene, which then is converted to polyethylene and dozens of other derivatives.

Industrial Info Resources is tracking a number of unplanned ethylene shutdowns in the Middle East caused by the ongoing conflict, including:

• Sadara Chemical Company (3,307 million pounds per year) (M Lbs/yr)
• Carmel Olefins Limited (529 M Lbs/yr)
• Tabriz Petrochemical Company (300 M Lbs/yr)

Other facilities that produce ethylene and derivatives have partially or completely shut down, including:

• Abu Dhabi Polymers Company Limited (Borouge) - (7,716 M Lbs/yr)
• Arabian Petrochemical Company (Petrokemya) - (8,433 M Lbs/yr)
• Kavian Petrochemical Company - (4,410 M Lbs/yr)
• Saudi Polymers Company - (2,568 M Lbs/yr)
• Marun Petrochemical Company - (2,425 M Lbs/yr)
• Arya Sasol Polymer Company - (2,425 M Lbs/yr)
• Jam Petrochemical Company - (2,910 M Lbs/yr)
• Bandar Imam Petrochemical Company - (906 M Lbs/yr)
• Amir Kabir Petrochemical Company - (1,146 M Lbs/yr)
• Morvarid Petrochemical Company - (1,433 M Lbs/yr)
• Jubail Chevron Phillips Company - (452 M Lbs/yr)
• Al Jubail Petrochemical Company (KEMYA) - (1,543 M Lbs/yr)
• Qatar Petrochemical Company Q S C - (1,852 M Lbs/yr)
• Bushehr Petrochemical Company - (2,205 M Lbs/yr)

The conflict and blockade have disrupted exports of ethylene and derivatives, causing their prices to shoot up worldwide.

If the Middle East situation continues, prices will remain high or rise even further. Even when the conflict ceases, the affected facilities will take months to return to normal operations, especially in Iran, where officials say that repairing the damage could take several years. Iran produces about 25-30% of the ethylene in the Middle East and has banned all petrochemical exports to stave off any domestic shortages.

Asia Impact

The conflict and blockade also have affected petrochemical operations in Asia, which depend on naphtha feedstock from the Middle East to produce ethylene and derivatives.

In China, Sinopec Maoming was forced to derate the production of the 1,411 M Lbs/yr Ethylene 2 Unit by 10% at the Maoming Petrochemicals complex in early March. Tentative expectations are to resume production at normal capacity by June, according to Industrial Info Resources data.

In Japan, Mitsubishi Chemical Corporation cut the ethylene production rate at its Kamisu Ibarki Chemical Complex due to the Middle East conflict.

Middle East Ethylene Buildout

Middle East ethylene complexes now under construction are likely to be commissioned in the next two to three years, increasing the region's ethylene capacity by 10 million metric tons per year.

Saudi Arabia is at the forefront of ethylene production, with current output of more than 17 million metric tons per year. It is followed by Iran with 10 million metric tons per year and the United Arab Emirates (UAE) with 3 million metric tons per year. Prominent ethylene producers in the region include SABIC and Aramco, both in Saudi Arabia; NPIC in Iran; Borouge in the UAE; Qatar Energy in Qatar and Equate in Kuwait.

Key Takeaways

• Industrial Info Resources is tracking unplanned ethylene production outages at 24 petrochemical plant units in the Middle East that have been caused by the ongoing conflict in the region.
• The conflict and blockade have affected petrochemical operations in Asia, which depend on naphtha feedstock from the Middle East.
• If the Middle East situation continues, ethylene prices will remain high or rise even further.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).