ESAI's East of Suez Petrochemical White Paper

Summary:

The next five years will see important changes in the global petrochemicals landscape, as the industry’s center of gravity shifts to the Middle East and Asia. This change will be led by the dramatic expansion of export-oriented petrochemicals capacity in the Middle East, and rising petrochemical demand in Asia, led by China. The concomitant rise of China’s own petrochemicals expansion, fuelled by its desire to become self-sufficient in petrochemicals will mark another turning point for the industry.

The massive cascade-like effect of rising petrochemicals supply will impact business strategies of petrochemicals producers the world over. In Asia, operators that have traditionally relied on exporting to China’s markets will find themselves in an extremely challenging business environment.

The role of regulation, government support to industry, and regional trade agreements will all be critical factors in assessing which industries will remain competitive and which may have to struggle harder to survive. Finally, the cascade-like effect of rising petrochemicals supply will eventually result in growth. This means petrochemicals feedstocks demand will also continue to grow. Naphtha’s role will be critical, as it provides higher yields of valuable hydrocarbons which will be critical for remaining competitive. However, other feedstocks will also gain prominence and feedstock flexibility will be integral to the success of petrochemicals profitability in coming years.

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