Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Seasonality in steam cracker availability will once again be a
major contributor to the accessibility of material and the market
balance in 2021. The Covid-19 pandemic, resulting lockdowns and
economic collapse of 2020 will continue to weigh on the
petrochemical industry in 2021 as the world learns to live and deal
with this new disease. One factor that will impact the olefin
industry is the delays that were seen on steam cracker turnarounds
in 2020. This is of particular note for Europe where many 2020
turnarounds have been pushed into 2021, and the result is that what
should have been a year of very limited maintenance will in fact
see a large level of turnarounds.
However, the level of steam cracker outages is not simply a
function of planned down-time but impacted by delayed restarts and
other unplanned issues which are often more disturbing to the
market than planned outages. In Europe, unplanned plant outages
made up for a low level of total capacity loss in 2016-2018 but in
the last two years this figure rebounded sharply, and in 2019,
exceeded the level seen even in 2015. With a relatively heavy set
of European cracker outages expected to be seen in 2021, a
reasonably high level of capacity loss due to delayed restarts can
be assumed along with the usual typical losses. However, this may
be mitigated given that much of the planned loss will be related to
one unit which is expected to be down all year, maintenance outages
are otherwise forecast to be at typical levels. Naturally,
unplanned outages are difficult to forecast with many
uncontrollable factors potentially leading to lost production.
The long-term view of planned and unplanned outages in Europe puts
the current level of maintenance into perspective. In the 1990s,
the average percentage lost to planned maintenance was 3.2 percent,
in the 2000s that figure dropped to 2.8, and in the 2010s the
average has been just 2.4 percent. This downward trend has been
matched by an upward move in unplanned or technical outages during
the same time periods. The shift towards longer intervals between
turnarounds had not been compromising performance as unplanned
outages had moved back to a lower level in the period of 2016-2018
whilst preserving these lower maintenance losses. However, the
trend was broken in 2019 and 2020 when exceptionally high losses
were seen. It is worth noting that a portion of the unplanned
losses can be associated to delayed restarts, which have a high
probability after planned maintenance, and were a contributory
factor to the 2019 increase, though not in 2020.
With turnaround information available for the U.S., West Europe,
Northeast Asia and Southeast Asia, a reasonably good image of the
likely pressure on the global olefin markets can be drawn as the
majority of global capacity is captured. The long-term changes for
steam cracker operators and whether they focus on preventative
planned maintenance or take their chances with unplanned issues do
not follow the trend seen in Europe. On a global basis, more
planned maintenance was seen in the 4-5 years following the
financial crisis than had been seen beforehand. The scale of
unplanned issues has also declined, although the period around the
financial crisis may have slowed the restart of crackers and skewed
the figures slightly. Up to 2019, global unplanned issues were
running at about 2.7 percent versus a pre-crisis level of around
3.5 percent, but 2020 saw exceptionally high losses of 5.7 percent.
The large jump in the 2020 unplanned losses was a combination of
several problems in Asia, prolonged outages in Europe and the
impact of hurricanes in the U.S. The combination of planned and
unplanned losses pushed the total level of outage to over 9 percent
on an annual average basis. When placing typical European figures
next to the global number, there is a stark difference between
maintenance, typically 1 percent lower in Europe, and technical
outages, around 1.5 percent higher.
Bringing the focus back to the present market, the dynamics for
turnarounds start to fill in the shorter-term outlook for ethylene
supply. When considering the combination of planned outages in the
U.S. (above average), Europe (far above average) and Asia (below
average) the industry will see constraints at points during 2021,
though, given the excess of capacity in the market, those
constraints are not expected to be prolonged. The exceptionally
high level of losses expected in Europe and very high losses in the
U.S. will both be focused in the second quarter. The result is
that, despite continued additions of new capacity, the underlying
market balance, which is long, is unlikely to be visible on a
consistent basis until the second half of 2021. Should unplanned
issues continue to weigh on supply, as they did in the second half
of 2020, the market may maintain its current tight balance until it
shifts longer in the second half of the year.
Chemical Market Advisory Service: Europe & Middle East Light
Olefins offers a comprehensive yet focused view of the European
and Middle Eastern light olefins markets. While this service
concentrates predominantly on Europe and the Middle East, it also
benefits from the insights provided by our Asian and North American
practices, making it a fully integrated service.
Clients receive quarterly price forecasts each month, along with
a quick reference appendix containing data on supply and demand,
trade, operating schedules, new project listings and price
forecasts. Through continual, personal contact with key industry
sources, chemical consultants gather and study industry-specific
data, then analyze and translate it into valuable insights and
forecasting advice.
