The dramatic rise in demand for petrochemical products globally has boosted the growth of petrochemical industry. The worldwide consumption of petrochemical products in 2014 was valued at US$ 550 billion. This figure is expected to touch US$890 billion by 2020!
The sectors that fueled the growth include construction, packaging, textile, plastics, healthcare, transportation etc., The petrochemical products that are in demand constitute ethylene, propylene, butadiene, benzene, xylene, toluene, vinyl, styrene and methanol.
Overwhelming Demand For Ethylene And Methanol
Ethylene accounted for 25% of the total global market consumption in 2014. This petrochemical product is used in the production of polypropylene and propylene oxide. Polypropylene or PP is used in applications such as packaging, stationery, textiles, automotive parts and laboratory equipment.
Another petrochemical product whose demand is expected to surge in next five years is Methanol. This organic solvent is used as a feedstock for the manufacture of chemicals, blending gasoline and for conversion of methanol to olefins.
The demand for Benzene is also increasing rapidly. Global demand for this aromatic hydrocarbon was 29,109,204 tons in 2010 which is expected to grow to reach to 42,292,167 tons in 2020.
Asia-Pacific – The Biggest Market For Petrochemicals
In 2014 alone, the total petrochemical products’ consumption in the Asia-Pacific region accounted to 50%. The robust economic growth and domestic consumption for petrochemical products in Asia Pacific have led to the growth of this sector and amplified intra-regional competition (Asia Pacific Petrochemical Industry: A Tale of Contrasting Regions, 2014).
Also, China is the biggest consumer and producer of petrochemicals in Asia-Pacific region. Chinese companies are focusing on externalizing by purchasing assets in Asia and worldwide to capitalize on the growth opportunities. The biggest market for polymers, dyes, adhesive, paints and coatings after Asia-Pacific region is Europe and North America.
Focusing On Operational Excellence Is The Key To Excel
The biggest challenge for local producers in the Asian market would be to compete with the influx of raw materials from the Middle East. The Middle East has the advantage to access natural gas and crude oil.
If producers in Asia Pacific market focus on operational excellence and embed a culture of cost-efficiency throughout all areas such as supply chain, finance operations, channel management, R&D to sales and marketing, then they can truly excel and sustain in the petrochemical industry.
Given the bullish long-term demand for petrochemical products, it seems likely that smaller and bigger firms, which have adequate resources to invest in R&D and adhere to environmental risk and safety considerations will grow their market share.