In the coming years, the global olefin industry may not have a good time, facing lower operating rates and more asset restructuring. Olefin plants around the world are operating at their lowest operating rates in over a decade, with worrying profitability. Although economic recovery will help improve supply and demand balance, the olefin industry ultimately needs to permanently close old and inefficient production capacity.
Industry observers have stated that they have noticed a downward trend in the olefin market since 2018. However, the outbreak of this issue has been postponed due to a series of subsequent "Black Swan" incidents. In 2020, the COVID-19 epidemic will have an impact on the economy, but unexpectedly, the demand for packaging and other non durable goods will surge, giving the olefin industry a respite. In February 2021, a winter storm along the Gulf of Mexico in the United States led to the shutdown of multiple cracking plants for over a month, alleviating the imbalance between supply and demand in the olefin market. By the end of 2021, the imbalance in the olefin market has begun to emerge. At that time, global ethylene production capacity exceeded demand by 20%, and propylene production capacity exceeded demand by 25%. High cost producers in Europe and Asia began to reduce operating rates. By 2022, the olefin industry had already fallen into a situation of oversupply. The cyclical recession in the industry will continue until at least 2024, or even longer.
