As the demand for petrochemical products moves East, India, with a burgeoning middle-class that will number around 400 million by 2025, is among the most important growth markets for companies from the Gulf, as per a study by Roland Berger Strategy Consultants. Rising oil and gas prices, growing demand from Asia and other emerging economies and strong global competition are presenting petrochemical companies with new challenges and long-term reliable access to feedstock, technologies and markets is becoming increasingly important. Strong economic growth and the rise of the middle-classes in many emerging economies is shifting the focus of global demand for petrochemical products eastward. In case of China, demand for petrochemical products is forecast to rise through 2015 at around 6% pa, and in the Middle-East by as much as 11%. By contrast, annual growth rates in Europe and the US will stick at around 1%. India, with a growing middle-class that will number around 400 mln by 2025, is one of the most important growth markets for companies from the Gulf. Whereas European and US petrochemical companies enjoyed a market share of around 62% in the 1980s, it had already fallen to just 30% in 2010. New suppliers from the Gulf States or parts of Asia have been consistently gaining market share since the 1990s, thanks to their enormous price and transport advantages.

In recent years, new oil and gas extraction technologies have made production from unconventional sources, such as shale gas, economically viable. Countries like the US and Canada have benefited strongly from the major shale gas reserves they hold and are becoming an attractive base for a lot of companies setting up refineries. In Europe, stricter environmental protection laws mean the industry will not expand into unconventional gas feedstock. As one of the largest Asian growth markets, China cannot satisfy domestic demand for petrochemical products from its own feedstock and products. According to the report, the government is promoting the creation of local research and development clusters, especially with European and US companies to enable Chinese firms enter into partnerships with outside players or build up their own capacities.

Gulf-based producers were able to continue implementing strategic moves during the economic downturn. Now that the world economic situation has improved, the Gulf petrochemical industry would emerge as one of the strongest production hubs in the global industry, as per Al-Mady CEO of SABIC. He also noted that total capital investment in petrochemicals in the region was expected to reach US$50 bln by 2015. Gulf petrochemical companies could almost double their market share to reach 20% of global production over the next decade as a slump in consumption winds down. The Gulf accounts for about 11% of the global petrochemicals market and is gaining from a shift in production from higher cost locations in Europe and the US.