The Total Addressable Market (TAM) for Ethylene was valued at USD 189.38 billion in 2022. It is projected to reach USD 301.43 billion by 2031, growing with a CAGR of 5.3% during the forecast period (2023–2031).
Ethylene is a widely used organic compound for manufacturing polyethylene and polyvinyl chloride (PVC). The extensive use of polyethylene in the production of the packaging industry is accelerating the ethylene market growth. The usage of ethylene-releasing compounds in the storage environment, which facilitates faster, more effective, and uniform ripening of fruits and vegetables, is driving market growth.
The United Nations (UN) has estimated the world population to reach 8.5 billion by 2030. Thus, the rising demand for food products across the globe is subsequently driving the demand for ethylene in the food & beverage industry. Ethylene is also used in the healthcare industry as an anesthetic, whereas it is used for extracting rubber in the rubber and plastic industry.
The quality of agricultural production relies on the growth of plants under different environmental conditions. Increasing environmental pollution and changing climatic conditions hampers agriculture productivity. The U.S. and China are significant contributors to agriculture production, followed by Brazil, whose agricultural production contributes about 4.36% to the country's GDP. The fluctuating rate of agricultural production can be minimized with the applications of ethylene in the food industry. Ethylene is regarded as a multifunctional growth regulator and is extensively used for the development of leaves, flowers, and fruits. The availability of synthetic chemical compounds of ethylene in liquid solution propels the market growth.
The ethylene market’s most prominent driver is the rising production of polyethylene across the globe. The widespread use of low-density polyethylene in the packaging industry provides an impetus to market growth. The burgeoning working population is subsequently boosting the demand for packaged food and beverages. As per the Statistics by OEC, in 2017, the export value of packaged medicaments from Europe reached about USD 50,600 million. The use of high-density polyethylene for the manufacturing of trays, bottles for fruit juices and milk, and industrial bulk containers drives market growth.
It is anticipated that the formation and implementation of stringent laws by the governments of various nations regarding the usage of petroleum-based products will significantly impede industry expansion. These regulations will require enterprises producing hydrocarbon-based gases to comply with such environmental protection standards. The depletion of raw material supplies, such as fossil fuels, and the volatility of crude oil prices may constitute a significant obstacle to the expansion of this sector. Consequently, there is room for the development of viable alternatives to these fossil fuels. Bioethanol, which is derived from natural sources such as starch and sugar, has emerged as a viable replacement.
The global ethylene market is segmented by raw material, end-user, and application.
The ethylene market is segmented into naphtha and natural gas.
The natural gas segment dominates the ethylene market. Ethylene is produced using two raw materials, naphtha and natural gas. In Europe and Asia, ethylene is primarily produced using feedstock naphtha, whereas, in the US, the Middle East, and Canada, it is produced using natural gas. As stated by the US Energy Information Administration (EIA), the prices of natural gas witnessed a considerable decline in 2019, which was about USD 2.57 per million British thermal units (MMBtu). Thus, lower prices of natural gas subsequently drive its consumption globally, further driving the segment growth.
The ethylene market is segmented into automotive, packaging, healthcare, textile, agrochemical, and building & construction.
The packaging industry has the highest global revenue share. Polyethylene is one of the most prevalent polymers used in this business. The product can be used to manufacture flexible and soft films for packaging and storage applications. It provides packaging polymers with a substantially lower softening point, which reduces energy expenditures during production. Moreover, ethylene vinyl acetate is a copolymer of vinyl acetate, and because it contains more anti-blocking compounds than polyethylene, it is commonly employed as a shrink film in food packaging. As a result of the large array of packaging applications for ethylene and its derivatives, the demand for ethylene will increase during the forecast period.
The ethylene market is segmented into polyethylene, polyethylene terephthalate, polyvinyl chloride, ethylene glycol, Polystyrene, and fibers & other organic chemicals.
The majority of plastic household packaging is composed of polyethylene. It is available in about 1,000 distinct grades. Plastic film, bottles, sandwich bags, and various forms of piping are some of the most common home items. Polyethylene is also present in certain fabrics and mylar.
Ethylene derivatives and by-products have a huge demand in the market as these chemicals are used across various industries. In addition to using ethylene at a large scale during the manufacturing process of polyethylene, it is also used in higher quantities to produce ethylene glycol. Ethylene glycol is used to manufacture synthetic textile fibers like spandex and polyester, which are extensively used for sports apparel such as swimming suits, jerseys, and more. With a huge demand for sports apparel in recent times, global textile and apparel exports reached USD 315,000 million and USD 505,000 million in 2018, with a rise of 6.4% and 11%, respectively. Growing demand from end-use industries will support the steady growth of the ethylene industry in the coming years.
The global ethylene market is bifurcated into four regions, namely North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific dominates the ethylene market and is expected to continue the same during the forecast period. The region is backed by the presence of leading players who invest heavily to enhance their production capacities. Additionally, steam cracker units in the region require low maintenance compared to other units. In South Korea, LG Chem and Hanwha Total established new manufacturing facilities in 2019, slated to increase the country’s ethylene production rate by 8.7%, i.e., 9.74 million metric tons/year. Asia accounted for about 55% of the ethylene exports in 2017, where South Korea held about 25% of the share with an export value of around USD 1 billion. The region is also backed by the presence of the largest petrochemical initiative — The Refinery and Petrochemical Integrated Development (RAPID) project. The project will provide feedstock for the integrated petrochemicals with a capacity of 3.3 million metric tons per year, thereby boosting regional market growth. The expansion of the regional market is also attributable to the rising demand for polyethylene (PE) from the plastics industry and chemicals from the chemical sector in nations such as China, India, and Japan. These countries' economic growth has led to an improvement in consumer lifestyle, resulting in a great demand for high-quality plastics for daily essentials. In addition, the expanding middle class is boosting demand for vehicles and housing. The dominance of China's plastics industry in the region is a result of the increasing number of younger populations who require new housing units and individual vehicles, hence boosting the market.
North America has a considerable part of the global market, which can be linked to the region's rapid technological development and high disposable income. Manufacturers are innovating new items due to the rising demand for plastic-based consumer goods. This demand and the strong economic standing of countries in the region drive the market. In addition, expanding the medical business has supported the market need for ethylene-derived items, such as IV tubes, injections, and pouches. These factors contribute to the growth of the market.
The European market is anticipated to expand significantly. This expansion can be attributed to the increased demand for vehicles among all consumer segments. Changing consumer lifestyles is a significant factor in the increased demand for luxury automobiles, creating market opportunities. Germany is one of the leading countries in the automotive industry's evolution due to technological advancements that give effective plastic solutions for automobiles to reduce their weight and production costs.
During the projection period, Latin America and, the Middle East & Africa are anticipated to experience strong expansion. Due to its high urbanization rate and rising economy, Brazil is one of the leading contributors to the region's expansion. In addition, increasing innovation in the region has led to high demand for the product utilized in the building and consumer products industries. The Middle East and Africa is a key source of raw materials, offering opportunities for regional industries. This growth can be linked to the expanding economy, which has increased customer disposable income, hence encouraging market expansion. Braskem and Idesa have engaged in a joint venture agreement, the "Ethylene XXI" project, for the large-scale manufacture of polyethylene in Latin America, increasing market revenue.
The most prominent players in the market are
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