The continuous high international oil prices this year have had a significant impact on the profitability of global petrochemical producers, especially the rising prices of natural gas, petroleum derivatives, and propylene (eg, sugar, hydrogen peroxide, propylene glycol, PG), and epoxy. The production costs of ethane and ethylene glycol (EG) have had a major impact. What are the prospects for the PO, PG, EG and EO markets in the current market environment? Earl Shipp, vice president of global business for oxide and alcohol products at The Dow Chemical Company, believes that demand for such products will continue to grow. Propylene oxide statistics show that PO market demand is expected to grow at an average annual rate of 3% to 4%. It is expected that global PO demand will remain strong. Although a large amount of production capacity has been added in the past three years, it has gradually been absorbed and absorbed by the market. Currently, the global PO market is in a balance between supply and demand, and supply will be tight after 2005. Dow believes that the current global PO production capacity, including the recent increase in production capacity, can adequately meet the growth in demand. The supply of propylene glycol in the global PG market will continue to maintain tense conditions and demand will remain strong. It is predicted that by 2005, the growth rate of PG demand will be consistent with the growth rate of global GDP. In 2003, the global PG demand was 1.41 million tons. Dow expects that the growth rate of global PG market around 2005 will reach an average annual rate of 2% to 3%. Shipp said, 'We can't expect the short-term growth rate of the PG market to be sustained, but PG demand is at least comparable to GDP growth. 'The supply of ethylene glycol to the global EG market will remain very tight and demand will continue to grow, especially in Asia, as the rapid economic growth in the region has led to a significant increase in demand for EG. Since 2001, due to the limited production capacity of global EG, there has been a marked shortage of supplies and the inventory level has hit a record low. In 2003, global EG production was approximately 1.59 million tons. According to historical data, the short-term growth rate of the global EG market is approximately double the GDP growth rate. People in the industry expect that the global EG market demand will increase at an average annual rate of 6% to 7% around 2005. Ethylene Oxide predicts that the global EO supply and demand tension will continue in 2005. As some EO production shifts to higher profit other derivative products, EO supply and demand will be exacerbated, especially in EG production, because EG production needs to increase. To meet market demand, the output of EO will also increase. Shipp pointed out that in 2003, the global EO demand was 1.45 million tons, and it is expected that the global EO market demand will increase by 5%/year in 2005, and then the growth rate will be 4.5%/year.
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