1. Industry Chain Analysis of Ethane Market
The upstream of the ethane industry is the natural gas and petroleum industries; the midstream is ethane producers; the downstream of ethane is mainly used for cracking to produce ethylene or as fuel.
2. Key Raw Material Suppliers of Ethane Market Analysis
The major suppliers of raw materials in the Ethane market include Sinopec, BP, and Chevron.
Table Key Raw Materials Suppliers Analysis
Suppliers | Contact Information | |
Natural gas | Sinopec |
|
BP |
| |
Chevron |
|
3. Major Downstream Buyers of Ethane Market Analysis
Table Downstream Buyers
Buyers | Contact Information |
Satellite Chemical |
|
Lotte Chemical |
|
Xometry |
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Oxygen Service Company |
|
Express Cutting & Welding Services Limited |
|
4. Ethane Market Drivers
‘Downstream demand continues to grow’
A major key element for the growth of the ethane market is rise in the production rate of ethylene owing to its wide range of end uses in various end use industries. For instance, according to an article published by the University of South Carolina in September 2021, ethylene is an essential building block component for the manufacturing of resins and plastics. Approximately 200 million tons of ethylene is produced annually, and its global production has exceeded as compared to any other organic compound. Ethane is mainly used to produce ethylene, which in turn is used by the petrochemical industry for the manufacturing of various intermediate products, such as plastics, natural gas, power generation application, and others. Furthermore, the consumption of ethane has increased in the U.S. owing to its increase in supply and low prices of raw materials. These factors are expected to act as one of the key drivers responsible for the growth of the ethane market.
‘Increasing investment by market players’
Increasing investments by various major players for development of new facilities, strengthening supply chain of the product, and technological upgrades is also contributing to market revenue growth. Ethane is a clean gas and can be turned to liquid form at high temperatures, which is why ethane is easier to liquefy, transport, and then gasify. This helps in reducing cost of transportation. This product can help to save environment and is being considered as the future of fuel. It can be used to supply power to industries where there is power crisis. Rising demand for sustainable and environmentally friendly fuels is expected to drive revenue growth of the global market.
5. Ethane Market Challenges
‘Oil and gas price volatility’
Ethane is the main component of hydrocarbon gas liquids. There are two sources of hydrocarbon gas liquids, one is produced during the crude oil refining process, and the other is separated from natural gas. As a result, ethane prices are closely tied to oil and natural gas prices. The profitability of ethane extraction and use may be affected by fluctuations in oil and natural gas prices, which alter ethane prices. In recent years, the global natural gas and oil markets have been affected by the COVID-19 epidemic and the Russia-Ukraine conflict. International oil and gas prices have increased significantly, which has had a certain negative impact on the ethane industry.
‘Environmental issues’
The production and use of ethane and its derivatives have an impact on the environment. According to a report released by the New Jersey Department of Health and Senior Services, a leak of large amounts of ethane gas would reduce the amount of oxygen available in the environment. In addition, the production and utilization of ethane will produce a lot of pollutants such as waste gas, waste water and waste residue. These pollutants can have an impact on the environment and ecosystems, leading to pollution of air, water and soil. As a result of these considerations, the use of ethane may be restricted by regulation. For example, in the United States, ethane is classified as a hazardous substance under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and is regulated under Section 112(r) of the Clean Air Act (CAA), which requires covered facilities to develop and implement risk management plans to prevent accidental releases of controlled substances.
‘Infrastructure limitations’
The transportation and storage of ethane requires special infrastructure. Because ethane is extremely difficult to preserve and needs to be frozen and liquefied first, its export and transportation are difficult. Corresponding export facilities and international shipping capabilities must be matched to form a complete supply chain to ensure the normal circulation of ethane. As a result, ethane accessibility and availability may be limited by infrastructure issues, particularly in areas with less developed infrastructure. This will now lead to the development of the ethane industry market.
6. Ethane Market Entry Barriers
‘Analysis of Financial Barriers’
The investment in building a new propane production unit that complies with safety, environmental protection and other regulations is relatively large. Due to the lack of process technology and production operation experience by new entrants, new equipment may not be able to achieve production and efficiency in the short term, resulting in increased capital investment. In addition, as countries around the world continue to improve safety and environmental protection standards, existing production companies need to increase investment in safety and environmental protection in a timely manner as required. Therefore, financial strength poses certain barriers to new entrants.
‘Analysis of Technical Barriers’
The ethane production process involves toxic, flammable, and explosive media, and each link requires strict control of safety process indicators. Its process control and detection methods require high intelligent standards. It is difficult for newly entered companies to master safe, stable and efficient production processes in a short period of time, especially technologies such as safety production, environmental protection, comprehensive energy utilization, chemical processes, process control, material control and automation control. Therefore, this industry has high technical barriers.
‘Analysis of Talent Barriers’
The production process of ethane is relatively complex and dangerous, requiring the collaboration of professionals at multiple levels and fields. In the current fierce market competition environment, the ethane industry continues to develop rapidly in the direction of intelligence, efficiency, and environmental protection, which places higher demands on technology R&D personnel. Excellent technical, management and sales talents are usually concentrated in industry-leading companies, and talent competition among companies is very fierce. With the development of the ethane industry, the demand gap for high-end talents with technology and experience is expanding day by day, and the gathering and reserve of talents have become an important barrier for new companies to enter the market.
‘Analysis of Brand Barriers’
Brand is consumers’ evaluation and recognition of a company and its products because of its excellent product quality, perfect after-sales service, good product image, beautiful cultural value, and excellent management results. A good brand image helps drive company growth. Customers are highly loyal to products and generally will not replace products easily. Companies with a good brand image can occupy an advantageous position in bidding and competitive negotiations, and their products can also achieve higher premium levels.
As an important chemical raw material, ethane is mainly used to produce ethylene, refrigerants and other products. The products in this industry have a high degree of homogeneity and little product differentiation, so brand barriers are relatively low.
7. Ethane Market Emerging Market Trends
In recent years, China is experiencing a period of rapid development, and industries and users such as packaging, automotive and transportation industries, building and construction, electrical and electronics, and healthcare industries are significantly driving the demand for ethane in China. Countries such as India and Australia are witnessing rapid growth in the automotive and transport sector, where ethane is used as an automotive refrigerant or coolant to provide structural integrity and improve the overall efficiency of vehicles. For example, according to a report released by India’s Ministry of Commerce and Industry in September 2019, India’s transport sector is expected to grow at a compound annual growth rate (CAGR) of 5.9% due to the development of highways, extensive rail networks, air ports and waterway structures. In addition, mature chemical industries in India, Japan, South Korea and other countries in the Asia-Pacific region have also increased ethane production capacity. Ethane is the basic raw material mainly used in the preparation of various chemical intermediates. This is expected to be one of the key factors for the growth of the ethane market in the region.
