Ethylene is a key building block for the global petrochemical industry and is used tornproduce about one-third of all chemical products. Therefore, its financial performance is oftenrnused as a proxy for the entire chemical industry. Ethylene and derivatives are largelyrncommodities whose prices and margins are sensitive to global supply and demand. Thus, thernglobal operating rate is a key performance indicator that requires special attention andrnforecasting to the best degree possible. Annual profit margins for ethylene can vary by over arnfactor of four from peak to trough industry conditions.rnThe UBS global equity research team analyses supply and demand for the globalrnethylene industry and publishes a report for its clients in the financial community. In thisrnpaper, we present our view of the global ethylene cycle and discuss the impact of ethanernproduced from shale gas formations as an ethylene cracker feedstock and how this impactsrnglobal competitiveness of the North American ethylene industry.
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