What has changed for the Steam Crackers in 2023?

IMF forecasts GDP growth of 2.8% which is slower than in 2022. Some of the observations of current market conditions are summarized below:

• The last year ended with a significant reduction in the capacity utilization of crackers globally. The largest impact was in Asia and Europe, and the somewhat lower impact was on ethane crackers in the US. Things are expected to improve in H2 2023, and the US will see higher overall utilization. Economic uncertainty remains.
• Ethylene exports have helped to balance supply and demand and are expected to grow in 2023.
• Ethane feed has remained an advantaged feedstock even with higher prices as compared to the pre-pandemic levels. This has impacted the cracker margins. Asia was mostly in negative margin territory for naphtha-based plants. Asia has added significant capacity in late 2022 and early 2023, further affecting supply-demand imbalances. The US started up three new crackers in late 2021 and 2022.
• Average cost of production for US ethane crackers jumped by almost 80% in 2022 while ethylene prices fell. While the cost of production will ease some, margins will remain tight due to the over-supplied situation globally.

The strategic focus for the industry in 2023 and beyond that can differentiate winners from losers will be:

1. Improving competitiveness through capacity utilization and performance improvements.
2. Meeting energy transition goals through carbon footprint reduction.
3. Working towards circularity goals.
4. Accelerating innovation and technology developments

At Apex PetroConsultants, we advise owners and operators in each of these areas and work together with their teams to turn these ambitious goals and objectives into reality.