Published August 1998
SRIC's last in-depth assessment of the profitability cycle in petrochemicals was carried out early in 1996, at a relatively favorable point in the cycle and before the financial crises in Asia. Because of the extent and persistence of those crises, it is now timely to review and update our projections. To that end, we assess the influence of the Asian crises on global demand for ethylene and the resulting effect on global capacity build-up. Because of the broader availability and reliability of U.S. data, we use that country as a global benchmark in quantifying profitability cycle timing.
Given the high level of uncertainty, rather than present a set of single-point forecasts, we employ a scenario approach and examine insights to be gained by looking at directional trends and assessing ranges of uncertainty for the parameters that affect market growth and profitability.
Because ethylene provides a good surrogate for petrochemicals in general, this analysis on profitability cycle timing is broadly applicable to the worldwide petrochemical industry as a whole. The review should be of particular interest to planning and evaluation groups.