The outlook for ethylene demand in the United States is poised for a notable upswing, with a projected increase of 4.1%, reaching a total of 37.7 million metric tonnes in 2024. This growth trajectory is contingent upon the stable performance of both the US and global economies. The anticipated expansion follows a 4% rise in 2023, reaching a demand peak of 36.2 million tonnes, and aligns with the growth pattern observed in 2022. Notably, prior to the onset of the COVID-19 pandemic, US demand for ethylene experienced a substantial 5% spike in 2019.

The Federal Reserve anticipates a deceleration in US GDP growth to 1.4% in the final quarter of 2024, marking a decline from the estimated 2.6% recorded at the end of 2023. Despite this slowdown, the Federal Reserve also foresees three quarter-point rate cuts in 2024, signalling a departure from the cycle of rate hikes initiated in 2022.

Interestingly, the US Gulf Coast has not witnessed any additions to its ethylene capacity since the commissioning of Bayport Polymer's Baystar ethane cracker in 2021. Operational challenges have been encountered by Shell's ethane cracker in Pennsylvania, which commenced operations in 2022. However, Chevron Phillips Chemical and QatarEnergy have plans underway to augment capacity in Texas by 2026.

Ethylene, a key component predominantly utilized in the production of polyethylene (PE)—the most ubiquitous plastic—also serves as a feedstock for various other products. Anticipated expansions in PE capacity from industry giants like Shell and Nova are expected to drive ethylene demand in 2024. Nevertheless, the forecasted demand projections face an element of uncertainty due to factors such as export challenges. A recent example is the impact of low water levels at the Panama Canal, disrupting vessel traffic and leading to a reduction in export volumes destined for China.

In 2023, North American ethane crackers operated at 80-85% capacity for the majority of the year. With a limited amount of global ethylene capacity expected to be added in 2024, domestic operational rates are anticipated to rise to meet the growing global demand. This projection underscores the intricate interplay of various factors influencing ethylene demand, from global economic conditions to regional capacity expansions and logistical challenges in international trade.

The projected growth in US ethylene demand for 2024 reflects a complex landscape influenced by economic forecasts, regional capacity dynamics, and challenges in the global trade environment. While the outlook suggests an upward trajectory, the industry remains vigilant in navigating uncertainties associated with factors such as export disruptions, emphasizing the need for a nuanced and adaptable approach to meet evolving market conditions.