North American petrochemical producers have had lofty margins in recent years, given ample ethane feedstocks derived from the regional shale boom.

Those margins, in turn, are leading to plans for new capacity, which could eventually give those producers more petrochemical products than the North American market can handle and put key companies in a position to need exports.

Could that threaten producers elsewhere -- most notably, in the Middle East, which historically has exported products to Asia and Europe? According to a recent industry poll at HydrocarbonProcessing.com,it very well could.

Poll results. With hundreds of votes cast, 44% said that Middle East petrochemical producers would ultimately lose market share in Asia and Europe due to North American exports, while another 28% said it was too early to tell. Only 28% of respondents said that Middle East producers would not lose market share.

In North America, producers including Dow Chemical, Chevron Phillips Chemical, Equistar, Formosa, INEOS, LyondellBasell, Sasol, Shell, Westlake and Williams have all expressed plans to build new capacity. Some, like Dow, are planning to build entirely new crackers, while other firms like LyondellBasell are debottlenecking current units. 

Shale sparks North American activity. The plans are sparked by continuing shale gas and oil discoveries throughout North America, leading to an ample and affordable supply of natural gas liquids (NGLs) such as ethane to be used as ethylene cracker feedstock.

Foreign companies are also beginning to target the lucrative US market as well. In a deal announced in early November, Mexico’s Mexichem formed a joint venture with US-based Occidental Chemical (OxyChem) to build a 1.2 billion lb/year ethylene cracker at Oxychem’s existing site in Ingleside, Texas (Fig. 1).

The Mexichem venture would start up operations in 2017, putting it on a similar timetable to several other announcements. That means that Middle Eastern producers should have at least a few more years of strong export viability.

Even in a few years, the Middle East will still hold the geographic advantage of closer proximity to Asia and Europe, potentially giving them lower logistics costs relative to producers in North America. But the newfound threat of overseas competition appears very real.