CMAI Completes 2011 World EO/EG Analysis

HOUSTON, Nov. 3, 2010 /PRNewswire/ -- Chemical Market Associates, Inc. (CMAI) announces the completion of the 2011 World EO/EG Analysis, an annual global study that covers historical trends and future projections for supply, demand, production, capacity, trade, pricing and profitability of the global Ethylene Oxide, Ethylene Glycol industry for the period 2005 to 2015. Included with each analysis is 12 months access to CMAI's online capacity and supply/demand databases with a mid-term supply/demand update, incorporating CMAI's latest market outlook. The 2011 edition, for the first time, includes global capacity analysis for purified ethylene oxide (PEO) and features CMAI's market sector forecasts on vehicle production and construction as well as projections of the middle class size in the BRIC countries. The analysis is a necessary resource for business managers and planning professionals who need to make strategic business decisions in a rapidly changing global economic and market environment.

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Current Market Situation

Many chemical sectors experienced the challenges of over-supply in combination with a significant correction in the demand growth over the past eighteen months. CMAI's latest analysis reveals that the global recession significantly impacted EO and EG demand growth in conjunction with the start up of significant quantities of new capacity that would have caused a "trough" in the petrochemical margin cycle, even in the absence of the global economic recession.  However, strong domestic demand in China and aggressive capacity rationalization in North America and Europe has reduced the depth and perhaps the length of the cyclical "trough."

After a severe contraction in MEG and EO derivatives demand in 2008, global demand growth for 2009 continued to be significantly lower than trend-line, adding pressure to a severely over-supplied market. Improvement in the demand side was seen in late 2009 and into 2010, though the over-capacity situation kept downward pressure on margins in early 2009 as the last of the MEG units under construction in Asia and the Middle East started operations in the first half.    

Market Outlook

The margin forecast suggests that 2010 may have seen the bottom of the period of over-supply and poor earnings for EO/EG and petrochemical producers in general, and especially for naphtha-based producers in Asia. Margins may be acceptable for those Asian producers, and could be attractive for low feedstock cost Middle Eastern producers and light-feedstock based EO/EG producers in the United States. European producers have higher feedstock costs, so the key to their profitability will be whether or not imports of MEG ramp up from the Middle East.

Through the establishment of large, low cost production capacity in the Middle East and Western Canada, MEG long ago became a global commodity. Though the merchant markets are still driven by differing regional dynamics, those markets are becoming more and more interrelated. Non-glycol EO derivatives markets have remained much more regionally differentiated. International trade in those products is increasing, and the nations and companies with growing domestic markets and or lower cost raw materials are increasingly looking to integrate further downstream, leading to changes in the cost and supply chain structures of the purified EO (PEO) derivatives markets.

To find out more about the current market issues and CMAI's outlook for this industry, order the 2011 World EO/EG Analysis now at www.cmaiglobal.com. The analysis is available in book and CD-ROM format, with access to CMAI's Online Capacity and Supply/Demand databases. With updates to the Capacity database as changes in the marketplace occur, and a bi-annual update to the Supply/Demand database, clients benefit from up-to-date market information necessary for strategic business decisions.

CMAI is the premier provider of Market, Planning and Business Advisory services offering a unique combination of consulting analytics and expertise for the global chemical, plastics, fibers and chlor-alkali industries. With offices in Houston, New York, London, Dubai, Dusseldorf, Bangkok, Singapore and Shanghai, CMAI has provided expert business advisory services to a broad base of companies across multiple value chains and geographies since 1979.  Clients to CMAI services include chemical and oil companies, technology & EPC companies, law firms, banking and financial institutions, plastic converters, textile & apparel manufacturers, brand-owners, grocers/retailers, government agencies and trading companies. 

For more information on the 2011 World EO/EG Analysis, visit CMAI's website at www.cmaiglobal.com or contact:

SOURCE Chemical Market Associates, Inc.