Preparing for Supply Overhang in the Olefins Industry

We expect a supply overhang in olefins industry in next two to three years, can be even sooner. Main factors contributing to this are:

• Planned cracker capacity additions in North America, Asia including China, and Middle East
• Softening demand 
  • slowing economic growth
  • Geopolitics – Middle East tensions, Tariffs/Trade barriers

Petrochemical businesses, including steam crackers, need to start positioning to stay competitive when margins will be under pressure. Industry will likely prepare for this by tightening overall spending. We believe that this offers an opportunity to owners and operators to be more competitive while targeting the long-term growth.
Here are some of the smart ways to prepare for the future:

• Take a holistic view of the business
• Mid to long term targets for business growth

This provides key input for evaluating options and approaches:

• Aligning current efforts with future growth expectations

Significant part of the competitive advantages result from:

• Utilizing the current assets effectively and efficiently

The success of these efforts depends on a good understanding of:

• Cost of production from your  existing assets
• Current / historical operation and performance parameters along with benchmarks

We help clients with these assessments and develop a roadmap for staying competitive during the periods of supply overhang while aligning the efforts for future growth. We believe that independent and cold eye reviews provide owners and operators with benefit of a different perspective.