GLOBAL ETHYLENE MARKET ANALYSIS

The global ethylene market size is expected to reach US$ 342.94 Bn by 2031, from US$ 220.10 Bn in 2023, exhibiting a CAGR of 5.7% during the forecast period.

Global Ethylene Market Regional Insights:

• Asia Pacific is expected to be the largest market for ethylene during the forecast period, accounting for over 42.0% of the market share in 2023. Positive economic and demographic trends, rising demand for petrochemical derivatives, and other factors are driving the market’s revenue growth.
• North America is expected to account for over 25% of the market share in 2023. The expansion of the region's ethylene production, increased demand for plastics and basic chemicals, and technological developments contribute to an increase in market revenue.
• Latin America is expected to account for over 17% of the market share in 2023, due to steady growth in the petrochemical and polymer industries.

Figure 1. Global Ethylene Market Share (%), By Region, 2023

To learn more about this report, request sample copy

Global Ethylene Market - Analyst’s Views:

The global ethylene market is poised to grow at a steady pace over the next five years. The market is primarily driven by the increasing demand from the petrochemical industry where ethylene is a crucial feedstock and raw material. Rapid urbanization and infrastructure growth across developing regions will boost the demand for polymers and plastics made from ethylene. The construction industry relies heavily on plastic pipes, fittings, and other ethylene-based products. However, volatility in crude oil prices remains a key challenge for ethylene producers. As ethylene is derived from petroleum feedstock, fluctuations in oil prices directly impact production costs. Strict environmental regulations regarding emission standards pose another barrier, as producers have to invest in upgrading their manufacturing facilities. Substitutes, such as bio-based ethylene, also increase competitive pressure on market players.

The Asia Pacific region, led by China, India, and other Southeast Asian countries, is expected to drive the maximum demand over the coming years. This can be attributed to massive investments targeted towards revamping public infrastructure and the growing petrochemical industry. North America and Europe will continue to be the other major markets, though their growth will be more modest compared to the dynamic Asian economies. The Middle East is also emerging as a promising regional market for ethylene due to facile availability of oil reserves and investment-friendly environments.

Global Ethylene Market Drivers:

Growing demand for renewable ethylene: The demand for renewable and sustainable sources of ethylene is growing significantly across the globe. Traditionally, ethylene has been produced from petroleum or natural gas, however, there is an increasing focus on producing it via renewable means such as bioethanol. This shift is being driven by the need to reduce dependence on fossil fuels and lower the carbon footprint of operations. Several companies are investing in bio-based technologies to produce ethylene through the fermentation of sugarcane, corn, or cellulosic biomass.

The availability of affordable bio-based feedstock coupled with technological advancements will be crucial for scaling up the renewable ethylene production. Several pilot plants are expected to start operations in 2022-2023 across major markets which will provide a strong proof-of-concept for bio-ethylene. This is anticipated to attract further capital into this space and accelerate commercialization efforts. The evolution of a well-established renewable supply network will strengthen energy security and independence of these economies. It will also foster greater synergies between the petrochemical and agricultural industries going forward. The rising demand as well as the multiple benefits of bio-based production are very likely to sustain high growth momentum of the overall global ethylene market in the medium to long term.

Demand from polyethylene industries: Polyethylene is widely used across many industries like packaging, construction, automotive, and consumer goods. It has become integral to modern life due to its versatility and resilience. Packaging alone accounts for over half of the global polyethylene consumption as it is used to make plastic grocery bags, food, and consumer product packaging films, bottles, containers, and others. The packaging industry has seen tremendous growth in the past few years driven by the expanding e-commerce sector, which relies heavily on plastic packaging to protect and ship goods. According to the United Nations, global e-commerce sales jumped from US$ 26 trillion in 2019 to over US$ 29 trillion in 2021. The available data suggests that the global e-commerce sales have been growing steadily, with a projected increase of 16.8% in 2021 to US$ 4.921 trillion, up from US$ 4.213 trillion in 2020.

Global Ethylene Market Opportunities:

Increasing investments in research & development activities: With the rise of the sustainable and clean energy movement globally, there is an increasing emphasis on innovation and transformation in the ethylene market. Significant investments in research and development can help companies tap into new opportunities and position themselves for future growth. R&D activities allow companies to develop more efficient production processes that reduce environmental impact as well as derive value from waste and byproducts. For instance, the European Union has set ambitious targets for reducing greenhouse gas emissions and increasing the share of renewable energy by 2030. This puts pressure on petrochemical industries to adopt greener technologies.

R&D investments can help ethylene producers transition to more sustainable feedstock and production methods. Several countries are supporting the development of bio-based technologies that utilize agricultural residues or municipal waste to produce ethylene. For example, the Ministry of New and Renewable Energy, government of India has allocated approximately US$ 280 million for 2020-21 to encourage private sector participation in advanced biofuel research that could yield bio-based pathways for ethylene in the future. Similarly, ethylene producers may explore carbon utilization opportunities such as converting waste carbon into higher value products through electrochemical and biochemical processes.

Growing demand from emerging economies: The growing demand from emerging economies can present significant opportunities for the global ethylene market in the coming years. Countries like India, China, Brazil, Mexico, and others are experiencing rapid industrialization and infrastructure growth which will drive higher consumption of ethylene and ethylene-based products.

Ethylene is a crucial petrochemical used in the production of important commodities like polyethylene, polyester, polyvinyl chloride, and ethylene glycol. As emerging nations look to improve their manufacturing capabilities and develop new industries, the need for such ethylene-derived chemicals is rising considerably. For example, polyethylene is extensively used in packaging, construction materials, and consumable goods. Its demand rises in tandem with the growth of consumer markets in emerging economies. Polyester is also seeing stronger offtake as textile and clothing manufacturing increases its footprint globally.

Furthermore, government initiatives focused on infrastructure expansion will create additional opportunities. Massive investments are being made across developing regions toward building new roads, rail networks, pipelines, telecom infrastructure, housing units, and others. All such construction activities involve extensive usage of ethylene-based commodities like polyvinyl chloride (PVC) for pipes and wires, polyethylene for geotextiles and liners, polyester for fiber reinforcement.

For instance, according to the World Bank data, India plans to invest over US$ 1.4 trillion in infrastructure during 2023-2030, that can substantially boost polyethylene and polyvinyl chloride consumption during this period.

Global Ethylene Market Trends:

Rise in offshore ethylene production facilities: Rise in offshore ethylene production facilities significantly influence the global ethylene market. In the past decade, several companies have invested billions of dollars to build large scale crackers and production units in coastal regions across Asia Pacific, Middle East, and Africa to take advantage of the low costs offshore.

This shift is allowing producers to access growing markets for ethylene and its derivative products in these regions in a more cost-effective manner.

Having production located closer to the end-use markets reduces transportation costs substantially. It also minimizes dependency on imports and supply chain disruptions. For example, Reliance Industries has set up the world's largest refinery and petrochemicals complex at Jamnagar in India, which consists of petroleum refining and petrochemicals plants. The ethylene cracker here has a capacity of 1.6 million tons per year.

Reliance Industries Limited is an India-based multinational conglomerate with headquarters in Mumbai, India. The company operates in various industries, including energy, petrochemicals, natural gas, retail, telecommunications, and textiles. It is the largest public company in India by market capitalization and revenue, and the 100th largest company worldwide. Reliance Industries has a significant presence in the petrochemical sector, with a focus on petroleum refining and marketing, as well as the production of petrochemicals.

The offshore production trend is also driven by abundant availability of natural gas feedstock and relaxed environmental regulations in these regions compared to developed markets in Europe and North America. Natural gas-based steam cracking requires lower capital and production costs in areas with lower gas prices. According to the USEIA, the average wellhead price of natural gas in the U.S. was US$ 4.91 per million British thermal units in 2021, while many Middle Eastern and Asian countries have much lower domestic gas prices. The lower fixed and variable costs allow offshore producers to be more competitive on delivered product costs even after accounting for transportation.

Growth in polymer cracker capacity additions: The recent additions in polymer cracker capacity across major economies is significantly influencing the global ethylene market dynamics. Countries like the U.S., China, Japan, South Korea, India, and others are heavily investing in expanding their existing cracker facilities as well as setting up new Greenfield Projects. This is being driven by robust demand prospects of downstream polymer products particularly polyethylene and polypropylene. The surge in cracker capacities enables petrochemical companies to boost ethylene volumes for in-house downstream units as well as sell surplus ethylene in spot markets. For instance, as per the U.S. Energy Information Administration stats, ethylene trade volumes between the U.S., Europe, and Asia Pacific increased by 12% in 2020 compared to the previous year indicating robust demand. This has put upward pressure on ethylene prices in key import regions.

Global Ethylene Market Restraints:

Fluctuations in crude oil prices: Fluctuations in crude oil prices have a significant influence on the global ethylene market. Ethylene is an essential petrochemical that is primarily produced from crude oil and natural gas. It is used to manufacture numerous important plastics and chemicals. When crude oil prices rise or fall sharply, it directly impacts the production costs and pricing of ethylene.

In recent years, from 2020 to early 2022, crude oil prices were fairly volatile owing to multiple factors like decreased demand during the COVID-19 pandemic lockdowns, output cuts by OPEC+, and geopolitical tensions involving major oil producers. The fluctuating crude prices presented both opportunities and challenges for ethylene manufacturers. In 2020, lockdowns had initially caused a steep decline in crude prices, making ethylene production cheaper. However, demand was also low as economic activities were slowed down. Later in 2021, as demand picked up with economies reopening, crude prices rebounded and rose significantly, increasing costs for ethylene companies. This impacted margins and pricing decisions.

Counter balance: Improving energy efficiency in ethylene production processes can lead to cost savings, making companies less exposed to the impact of raw material price changes.

Environmental concerns regarding emissions: Environmental concerns over emissions have indeed emerged as a major restraining factor. With mounting pressure to curb greenhouse gas emissions globally, industries that produce significant amounts of emissions during their operations are facing challenges. The ethylene production process relies heavily on cracking of hydrocarbons such as ethane and propane, which results in the release of carbon dioxide and methane. Both these gases are known to be major contributors to global warming.

Several studies conducted by independent research institutes and reports by inter-governmental groups like IPCC Intergovernmental Panel on Climate Change have highlighted the need to reduce emissions from the petrochemical industry in order to achieve international climate change goals. For instance, a 2021 report by the UN Environment Programme states that the chemicals and petrochemical sector alone accounted for 2.76 Gt of carbon dioxide equivalent greenhouse gas emissions in 2018, which is nearly 8% of global emissions. It recommends strategies like deploying carbon capture and storage technologies as well as switching to less carbon-intensive feedstock to lower emissions from this sector.

Faced with such evidence and policy pressures, ethylene producers are finding it increasingly difficult to expand capacities or build new plants without making big investments in carbon reduction. Major economies like the European Union and China have unveiled regulatory mandates and carbon pricing mechanisms targeting industries that fail to transition to low-carbon business models. While the demand for ethylene remains robust driven by downstream plastic manufacturing, the regulatory headwinds pertaining to emissions can act as a deterrent to higher investments in this sector. Some companies have even postponed or cancelled billion-dollar ethylene plants owing to uncertainties around emission regulations. Unless extensive efforts are made to transition to cleaner production methods, environmental concerns will continue restraining the long-term growth trajectory of the global ethylene market.

Counter balance: Obtain environmental certifications and comply with global standards such as ISO 14001, which demonstrates commitment to environmental management and sustainability.

Recent Developments:

• In March 2022, Honeywell launched new advancements in technology to boost the production of ethylene from naphtha crackers. Honeywell is a publicly traded, multinational conglomerate corporation headquartered in North Carolina, U.S.
• In October 2021, Dow intends to construct the world's first integrated ethylene cracker and derivatives plant with net-zero carbon emissions. The project will triple Dow's ethylene and polyethylene capacity while retrofitting the business's current assets to emit zero carbon.
• Dow is a materials science company that offers a wide range of products and services, including agricultural films, construction materials, and medical products. The company is headquartered in Michigan, U.S. and has a market cap of US$ 37.601 Bn as of January 2024. In Q4 2023, Dow beat earnings expectations, with reported EPS of US$ 0.43, exceeding expectations of US$ 0.4.

Acquisitions and partnerships

• In April 2022, Lummus Technology and Braskem, a global petrochemical company partnered to license green ethylene technology globally, enabling the production of bioethanol-based chemicals and plastics. This collaboration supports the industry's commitment to a carbon-neutral circular economy.
• Lummus Technology is a leading licensor of proprietary petrochemicals, refining, gasification, and gas processing technologies.

Figure 2. Global Ethylene Market Share (%), By Derivative, 2023

To learn more about this report, request sample copy

Top Companies in the Global Ethylene Market:

• Saudi Basic Industries Corporation (SABIC)
• Exxon Mobil Corporation
• The Dow Chemical Company
• Royal Dutch Shell plc
• China Petroleum & Chemical Corporation (Sinopec Corporation)
• Chevron Phillips Chemical Company LLC, Total S.A.
• LyondellBasell Industries
• National Petrochemical Company (NPC)
• INEOS Group AG.

*Definition: Ethylene is a colorless, flammable gas with a faint "sweet and musky" odor when pure. It is the simplest alkene, with the chemical formula C2H4 or H2C=CH2. Ethylene is a group of plant growth regulators widely used for ripening fruits, promoting the production of more flowers and fruits, and germination of seeds. It is abundantly used in the chemical industry, particularly in the production of polyethylene, a widely used plastic. In addition to its industrial applications, ethylene is also an important natural plant hormone, functioning as a growth regulator that promotes the ripening of fruits and the shedding of leaves. It occurs naturally in certain plants and can be obtained from petroleum and natural gas.