Ethylene Oxide

Ethylene Oxide Global Market Outlook

• The global market for ethylene oxide is expected to grow at a CAGR of 4-5 percent between 2022 and 2025, to reach $51.5 billion in 2025.

• Ethylene oxide is expected to witness a significant increase in demand from its end-user applications, particularly ethylene glycol and ethoxylates, polyester fibers and PET resin.

• The demand for PET bottles from the food and beverage industries is boosting the worldwide Ethylene Oxide market.

Global Market Size: Ethylene Oxide

• The global EO market is valued at $45.6 billion in 2022, and it is estimated to touch $51.5 billion by 2025. During the estimated period, the demand for MEG sector is likely to increase at an exponential rate, which is expected to promote the expansion of the ethylene oxide market.

• The disturbance in the global supply chain due to COVID-19 outbreak has a negative impact on several end-user sectors, including textiles, automotive, and others.

• During the pandemic, however, there was a boom in demand for Ethylene Oxide for the production of hand sanitizers and other cleaning agents and the prices are expected to increase during the forecasted period.

Ethylene Oxide : Industry Drivers and Constraints

Drivers

• Demand from downstream industry: Consumers have begun to choose better-packaged food and beverage items. The increase in the usage of PET bottles is a driver for the increase in ethylene oxide. Home and Personal care industry is expected to witness a strong growth rate especially after the Covid-19 pandemic due to increase in hand washing frequency leading to strong demand from Surfactants end use industry.

• Capacity addition in ethylene oxide market: With planned capacity additions of ethylene oxide, the supply of EO in the merchant market is expected to improve.

Constraints

• Regulations:  The primary hazard associated with EO is its high flammability. EO reacts strongly with caustics, acids, some metals, and a variety of other compounds, and it can decompose explosively.

• Despite the fact that EO is a dangerous substance, EO railcars are designed with several safety features, and EO producers collaborate with customers to ensure that EO is handled and used safely. Most of the European users are located near or at production locations, and the majority of volume is transported via pipeline.

Ethylene Oxide Cost Structure Analysis

• Price movements of ethylene have a considerable impact on the production cost and margins

• Supply demand dynamics play a significant role in Europe price movements

• Majority of EO contracts are formula based, comprising of 80-85% percent contribution of Ethylene contract prices

• EO prices are significant, as they are highly correlated with Ethylene prices.

• Any changes in the feedstock ethylene prices will have high impact on EO values