Planned Ethylene Turnarounds Remain Slim for Second Half of the Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--At this time last year, there were only nine ethylene units scheduled to have planned maintenance turnarounds across North America and South America. That number quickly grew to more than 40 actual turnarounds as the result of hurricane and tropical storm activity in the Gulf of Mexico during the late summer months of 2008. So far this year, the level of scheduled maintenance turnaround activity is even slimmer with only four planned turnarounds currently scheduled for the remainder of this year, as identified in Industrial Info's Ethylene Tracking Database. This very minimal level of activity is reflective of the current economic and market woes being experienced by virtually every petrochemical company.

So far this year, tropical storm activity has been very slow and below normal, considering we are nearly two months into hurricane season. Some of this can be attributed to El Niño conditions, which can help to suppress Atlantic hurricane activity.

As in any hurricane season, even one small storm making landfall in the Texas or Louisiana region could disrupt ethylene production severely. Considering that more than 90% of the ethylene capacity in all of North America is produced in these two states, this could have a devastating impact on downstream markets. As there has been a great deal of consolidation in this industry segment of the Chemical Processing Industry (CPI) during the past year and even more planned closures announced recently, supply in this market could become tight in a hurry should any significant weather events occur during the next couple of months.

Next year could be the biggest year for planned ethylene turnarounds seen in quite a while. Industrial Info is currently tracking 14 ethylene unit turnarounds planned for 2010. A majority of these planned turnarounds are expected to take place in United States along with two in Canada, one in Mexico and two in Argentina. Many of these turnarounds cannot be delayed as they were previously deferred and run-cycles between required inspections or repairs have been extended to their limits. The expected slow recovery of demand could actually play well into turnaround plans for the upcoming year, allowing producers time offline while demand is depressed. Downstream uses for ethylene, such as polyethylene, polypropylene, and other polymers, are not expected to experience any sizeable amount of relief until sometime in 2010 or latter.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.