Refinery Expert Issues Predictions and Warnings

A refinery expert is predicting that high crude oil prices will lead to a global decline in ethylene and derivates consumption growth in 2007 and beyond. Alastair Hensman, a senior consultant at Nexant ChemSystems, believes global low-density polyethylene consumption growth will fall to around 7 percent in 2007 from around 8 percent in 2005 and will fall to 6 percent in 2008 and 5 percent by 2010. Ethylene cracker operating rates are set to undergo a downturn from 2008, while margins are also expected to take a hit during 2007-2011. "I'm not saying that there will be a catastrophe. I'm just saying be careful. There will be a slowdown. They've happened before and they'll happen again. There will be a period of stress during this time," said Hensman at the World Refining Association's Global Petrochemicals Conference in Brussels. The fall in consumption growth will coincide with increased production capacity owing to new plants in the Middle East and China.