Ethane Market - Industry Size, Share, Growth & Forecast 2028 | UnivDatos

 

THE PREFERENCE OF ETHANE OVER OTHER FEEDSTOCKS AND AN UNINTERRUPTED SUPPLY OF ETHANE THROUGH PIPELINE FROM US HAS GIVEN RELIANCE INDUSTRIES A COMPETITIVE EDGE OVER OTHER PLAYERS IN THE SEGMENT

Reliance Marks Six Years of Successful Ethane Value Chain Journey

In February 2023, Reliance completed the six-year journey of its ethane value chain project. This ethane value chain acted as a virtual pipeline of ethane supply from the USA to India, establishing uninterrupted ethane supply to India's ethane crackers and assuring feedstock security, flexibility, and a competitive advantage over other players. Furthermore, even though the ethane prices were highly volatile, seeing a high of 68 US Cents per gallon in June 2022 and a low of 22.7 US cents per gallon in February 2023, the average price was maintained at 44.4 US cents per gallon in FY 22-23, despite this high prices ethane is continued to be the preferred feedstock and helped the company clocking significant profits by trading ethane.

Polymer and Elastomers Global Market Environment and Global Cracker Operations Reported as per the Company

Global polymer demand in CY2022 had been stable at 245 MMT on a Y-O-Y basis. Global polyethylene demand grew by 0.3%, polypropylene demand remained flat, while PVC demand contracted by 3.4%. Growth is seen in the global demand for Styrene Butadiene Rubber and Polybutadiene Rubber, which was up by 4% and 2%, on the back of demand for the automotive sector. Furthermore, global Ethylene demand saw an increase of 2% Y-o-Y to 183 MMT. The company has also undergone a new capacity addition of 10 MMTA in CY2022, which has helped the company lower its operating rates by 1%. Additionally, US Ethane average prices increased by 27% Y-o-Y from 35 US cents per gallon to 44 US cents per gallon in FY 2022-23, led by higher Natural gas prices. Naphtha average prices in Asia were down by 3% Y-o-Y from USD 718/MT to USD 696/MT, due to lower demand from Petrochemicals.

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Reliance Industries Performance Update of 2022 of its Oil to Chemical Segment.

• Revenue USD 72.5 billion

The oil-to-chemical segment of the company generated 18% higher revenue from the previous financial year, with an EBITDA of USD 7.57 billion up 10.4% Y-o-Y, which was the highest ever EBITDA reported by the company.

• The revenue of the company was mainly driven by: Improved transportation fuel cracks, feedstock sourcing flexibility, ethane cracking advantages, and better average fuel prices globally.                                                  

INDUSTRY OVERVIEW:

•  During FY 2022-23, Global refinery operations increased steadily on the back of strong demand, high refinery margins, and also due to the start-up of new refineries in the Middle East, the US, and China.

•  Cracker feed-mix optimized based on Naphtha vs. ethane economics, lower US ethane prices supported chemical margins.

•  Polymer prices weakened during FY 2022-23 amidst lower demand from China due to COVID related restrictions including recessionary concerns in major developed markets. Global operating rate for PP, PE and PVC averaged 81%, 83% and 79% respectively during CY2022, lower than CY2021. Polymer margins weakened during the year as product prices declined more than feedstock prices. Integrated PP-Naphtha, HDPENaphtha and PVC margins contracted by 32%, 15% and 17% respectively during the year.                                                        

STRATEGIC PRIORITIES AND WAY FORWARD

• Reliance is focusing on diversifying its feedstock sourcing and also making a continuous effort to minimize the cost of the feedstocks. To achieve these goals the company has presented the roadmap where Reliance is establishing long-term contracts for timely EDC imports to ensure zero loss in productivity. Furthermore, the company is eyeing feed flexibility in CDUs with debottlenecking of lighters and naphtha handling capability. Additionally, the company is also maximizing its ethane sourcing to optimize the feedstock cost.

• The company is also making efforts to improve its product netbacks, increase the reach of its products to wider markets, and increase focus on quality upgradation. To achieve all these milestones set by the company they have integrated the polyester assets of Shubhalakshmi Group one of their recent acquisition in the sector to augment Reliance Industries Limited's (RIL) polyester product portfolio. Furthermore, they have successfully implemented the quality upgradation of the naphtha for improved product placement flexibility and netbacks. Moreover, the company is also tying up its PVC downstream processors across its business value chain.

• The company is also focusing on running its assets at their full capacity and minimizing its operating costs as well in the process. This can be done by Implementing various Performance Improvement Options (PIOs) for energy conservation in Gasification., Furthermore, the company plans to develop In-house specialty-grade PP and LDPE catalysts for cost optimization.

About Reliance

Reliance Industries Limited is an Indian multinational conglomerate founded by Dhirubhai Ambani in 1966. RIL operates across various sectors such as petrochemicals, refining, retail, telecommunications, and financial services. It is one of India's largest private sector companies, with a market capitalization of over $200 billion. Under the leadership of Mukesh Ambani, RIL has expanded its global footprint through strategic acquisitions and partnerships, solidifying its position as a leading player in the Indian economy.

Conclusion

In conclusion, Reliance's successful venture of creating an ethane value chain, and increasing revenue and profits in the oil-to-chemical segment is a testament to the huge growth opportunity that is being created in this sector.  Furthermore, Reliance is taking significant steps towards promoting a circular economy achieving carbon neutrality, and countering the environmental concerns of the globe.

Further, a few other investments in the Ethane market are also expected in the near future. According to the UnivDatos Market Insights analysis, the surge in the investments related to ethylene products will drive the scenario of global Ethane production and as per their “ Global Ethane Market” report, the market was valued at USD 13.38 Billion in 2022 and expected to grow at a CAGR of 4% during the forecast period from 2023 - 2030 to reach USD XX Million by 2030.