Global Processing

Prospects look good for global ethylene oxide, ethylene glycol markets

August 8, 2013

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Global demand for ethylene oxide and ethylene glycol will remain on a steady upward trajectory in the next five years, Transparency Market Research forecasts in a new report. According to the publication, growth will be sustained by robust demand for PET resins and polyester fibers, as well as rising demand for automotive antifreeze.

In 2011, the value of the worldwide ethylene oxide market stood at $29 billion. Compound annual growth between 2013 and 2018 is projected at 5.7%, which means that the market will be worth $42.6 billion by the end of the period. In terms of geography, the Asia-Pacific is the global leader in ethylene oxide demand and contributed about 64% to total revenues in 2012. Together with Central Europe, the Middle East and South America, the Asia-Pacific will drive up demand for ethylene oxide in the next few years. North America and Western Europe will make only a modest contribution as their mature markets deliver sluggish growth.

As for ethylene glycol, global revenue in that market amounted to $20.4 billion in 2011. The figure is forecast to hit $30.8 billion by 2018, with compound annual growth over the period projected at 6.1%. The Asia Pacific is the leading region here as well. Thanks to massive domestic demand, the Asia Pacific is expected to deliver the strongest growth in both ethylene oxide and ethylene glycol demand, expanding at a compound annual rate of 4.9% between 2013 and 2018.

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The global rise in disposable incomes has been a key driver of demand for PET bottles, which are used for water and carbonated drinks storage. This, in turn, has been fueling demand for ethylene oxide and ethylene glycol in the past decade. In addition, growth has been helped by demand from textile manufacturers and the automotive industry. On a global scale, ethylene oxide is primarily used to produce ethylene glycol (76%) and ethoxylates (14%). Around 45% of the ethylene glycol goes into making PET bottles. The PET market was worth $8.4 billion in 2011 and its value is expected to rise to $13 billion in 2018. Ethoxylates are used in the production of detergents and rising demand for household cleaning products is also making a contribution to market growth.

Monoethylene glycol (MEG) accounts for more than 90% of total ethylene glycol production. The top applications for ethylene glycol are polyester fibers and PET resins, which were jointly responsible for more than 85% of ethylene glycol demand in 2011. Diethylene glycol (DEG) and triethylene glycol (TEG), byproducts in MEG manufacture, are the next most widely used products.

The list of top players in the global ethylene oxide and ethylene glycol market features names such as Dow Chemical, Saudi Arabia's SABIC, Shell Group of the Netherlands, Huntsman Corporation, German-based BASF, China's Sinopec and Reliance Industries of India. The market is characterized by quite a high level of forward integration, meaning that the top ethylene oxide suppliers are also engaged in the production of glycols. For companies operating in that segment, the main concerns at present are volatile crude oil prices and regulatory pressure.