Integration of each production unit back to ethylene is taken into account to develop integrated production cost curves showing the cash cost of production from base feedstock, whether it be ethane, NGL, naphtha, coal or bio-based, utilizing the research and analysis developed in the Chemical Cost Curve Service – Ethylene.
Cost curves provide insight into which production technologies provide cost advantages, the degree of the advantage, and how this is expected to change over time. Find out which are the lowest-cost regions, countries and plants, both today and into the future, both on a direct production cost basis as well as on a delivered basis with curves that compare cost of local producers with cash cost of imports from major producing regions including freight, logistics and duties. Identify the marginal producing location and how this affects pricing. Understand how the shape of the cost curve affects overall and regional profitability for this key building block of the chemical industry.
Key trends, such as the recent wave of capacity additions in the Middle East and a shift toward lighter feedstocks as price differentials between crude oil and natural gas-based feedstock have widened in many regions, are significantly affecting the competitive landscape of the polyethylene industry and increasing the share of low-cost polyethylene production. This is putting pressure on higher-cost producers, either through imports or the loss of market share in the export market, as competition in the international marketplace intensifies. The cost advantage of lighter feedstock-based polyethylene production is forecast to persist, with the impact of shale gas putting North America back into the a favorable feedstock.
Capital investments in ethylene and polyethylene facilities will continue to be directed mainly toward countries and regions with advantaged feedstock cost or high demand growth. The availability of low cost natural gas-based feedstocks in parts of the Middle East, Africa, Commonwealth of Independent States (CIS), Southeast Asia and the Americas, therefore, will encourage local investors and also attract foreign investment, particularly for polyethylene plants. Countries with excellent future demand growth prospects, such as China, are also preferred investment locations, often supported by a rapidly growing converter industry that manufactures finished products for export and a large domestic market.
The development of green sources for the production of plastics is advancing steadily and is generating the first tangible results. Commercial production of polyethylene from sugarcane commenced in Brazil in September 2010. Customers include major consumer product corporations that will be using the sugarcane-based polyethylene resins for packaging of cosmetics and container closures. A second project for the production of bio-polyethylene, also in Brazil, was announced jointly by Dow and Mitsui & Co. with start up expected over the next five years.
The Cost Curve Service – Polyethylene analyzes each of the world’s polyethylene production facilities, building up cost based on the technology, estimated feedstock cost, utility consumption and other variable and plant fixed costs. Plant size, degree of integration and operating rates are all taken into account. Views are provided on an integrated and non-integrated basis, including ethylene either at cash cost of production or market price for integrated producers. Cost of delivery from major producing regions to major consuming regions, including freight, logistics and duties, is included to generate delivered cost curves.
The cost curve covers all of the key processes for producing polyethylene, including:
High-density polyethylene (HDPE)
- Gas phase
- PF loop
Linear low-density polyethylene (LLDPE)
- Gas phase
- PF loop
Low-density polyethylene (LDPE)
Any person, company or government interested in producing or purchasing polyethylene, or designing or constructing polyethylene plants, should be aware of the competitive positions within the global PG/CG polyethylene industry. Chemical, with its extensive databases, models and expertise, has prepared the Cost Curve Service to address this need.