The global petrochemicals market was valued at US$472.06 bln in 2011 and is expected to reach US$791.05 bln by 2018, growing at a CAGR of 6.7% from 2012 to 2018. In terms of volume, the global petrochemicals consumption was 436.86 mln tons in 2011 and is expected to reach 627.51 mln tons by 2018, growing at a CAGR of 5.4% from 2012 to 2018, as per Transparency Market Research. Growing consumption from major end use industries including construction, packaging, transportation, textile, plastics, healthcare and so on coupled with favorable operating conditions mainly in the Middle East and Asia Pacific is expected to drive the global market for petrochemicals over the next five years. Government initiatives in India and China to set up petrochemical complexes in the region are also expected to fuel the market growth. The rapid exploration and development of unconventional gases such as shale gas is also expected to provide feedstock advantage to petrochemical producers. However, volatile raw material prices and growing environmental concerns regarding the production and usage of various petrochemicals are expected to be a key challenge for market participants. Regulatory intervention has resulted in the industry shifting focus towards developing bio-based alternatives for petrochemicals. Ethylene dominated the petrochemical market and accounted for over 28% of the total consumption in 2011. Growing demand for polyethylene, a major derivative of ethylene, mainly from packaging industry is expected to boost the global market for ethylene over the forecast period. However, widening supply- demand gap due to capacity addition in the Middle East and Asia Pacific is expected to put pressure on ethylene prices, globally. In terms of volume, methanol is expected to be fastest growing petrochemical at an estimated CAGR of 10.3% from 2012 to 2018. The growth of methanol is largely driven by its emerging application in gasoline blending and conversion of methanol to olefins (MTO). China was the leading consumer of petrochemicals and accounted for over 25% of the global consumption in 2011. Along with being the largest market, China is also expected to be fastest growing market, at a CAGR of 6.7% from 2012 to 2018, owing its significant downstream processing capacity. Asia Pacific including China accounted for over 45% of the total demand in 2011. North American market for petrochemicals is expected to be driven by rapid development of shale gas in the U.S. The global market for petrochemicals is highly fragmented in nature. Top ten companies accounted for just over 49% of the total petrochemicals market in 2011. BASF, Sinopec and Exxon Mobil were the largest petrochemical manufacturers and together accounted for nearly 20% of the total market share in 2011. Major industry participants have fully integrated operations from extraction of crude oil and natural gas to production of petrochemical derivatives. Some of the other players operating in the global petrochemical market include Chevron Phillips, Dow Chemical, Company, Ineos, LyondellBasell, National Petrochemical Co., PetroChina, SABIC, Shell Chemicals and Total among some other companies.
As per GlobalData, the Chinese petrochemicals industry is the fastest growing petrochemicals industry in the world. As with other petrochemical markets, the Chinese petrochemicals market stumbled as recession slowed down the growth, but stimulus packages and strong demand from its large domestic market helped to revive the petrochemicals industry. The Chinese petrochemicals industry is imports-dependent, which will continue to benefit the producers in other countries such as Saudi Arabia, Japan, Korea and the US. These countries can extend their excess supply to the Chinese market. The fast growing Chinese market is attracting foreign producers who are entering into joint ventures with Chinese producers to establish manufacturing facilities in China. The demand for basic petrochemicals and major plastics in China has increased from 37.949 mln Mtpa in 2000 to 100.843 mln Mtpa in 2010, at a CAGR of 10.3%. The demand growth rate in China is high as compared to the production growth rate, which makes it dependent on imports to meet its domestic demand. The growing Chinese demand in the recovery phase provides opportunities to producers in other countries who can export their excess supply to the Chinese market. Major Asian countries such as Japan and South Korea have benefited most by exporting to China. In 2010, Korea accounted for 31% of China’s total basic petrochemicals imports and 21% of major plastics imports, while Japan accounted for 23% of China’s total basic petrochemicals imports and 9% of major plastics imports. As per Dr. Alexander Keller, Dr. Jaap Kalkman and David Nothacker of Roland Berger Strategy Consultants, Asia has a highly varied petrochemicals landscape. The largest market, China, is aiming to increase its self-reliance and using more of its own natural and human resources. South Asia, by contrast, is fragmented and depends on imports of raw materials. India is still in the first phase of development, but has set its sights on second place in the global petrochemicals market. Overall, global demand for petrochemicals is expected to double over the next two decades. Europe and North America together will account for about 20% of that demand, down from just over 40%. Traditional exporters of raw materials, such as the Middle East, will therefore retain their status, but amid increasing competition. Asia already holds the lion's share (43%) of the global petrochemicals market. China and India are the dominant players, expecting annual growth rates of 6% and 10% respectively. This is due primarily to expanding end-user markets, positive economic development and a rising standard of living. It's estimated that by 2020, the number of Chinese consumers with an annual income exceeding US$ 10,000 will increase by 300 million. By 2025, India's middle class will probably swell to 400 million consumers. Consumption of petrochemicals products is expected to grow in both countries. For these reasons, consumer industries will be directing their attention – and their investments – to the East.
The trend is clear: the Middle East will have to bid farewell to its indisputably lucrative raw materials situation as the era of "cheap gas" draws to a close, while Asia seeks new ways to reduce its dependence on raw materials imports. For example, China is increasingly using its own coal reserves to curb its reliance on oil and gas imports. The Chinese government has redefined its raw materials strategy, embedding the goal of domestic shale gas production in the most recent Five Year Plan. China possesses the largest – and so far untapped – shale gas reserves in the world. Annual output is projected to reach six billion cubic meters as early as 2015. Nevertheless, Asia overall will remain dependent on imported raw materials, since the new domestic sources of raw materials won't be able to keep up with the growing demand. Almost all of Asia's governments are actively driving the development of the petrochemicals industry, particularly in R&D, clusters, infrastructure and know-how.