The global petrochemicals market size was predicted at USD 441.0 billion in 2019 and is anticipated to witness a CAGR of 5.0% over the forecast period. The growth of the market for petrochemicals will be driven by rising demand for downstream products from end-use industries and capacity additions in the base chemical industry.
The petrochemical industry is a vital component of numerous industrial processes as it provides raw materials for a wide array of products that find application in automotive, construction, and manufacturing. Some of the products derived from petrochemicals are tires, detergents, industrial oil, fertilizers, plastics, medical devices. The basic chemicals and plastic derived from the petrochemicals act as a building block for numerous non-durable and durable consumer goods.
U.S. recorded an investment of more than USD 217 billion in petrochemical downstream operations since 2013. The significant growth of the industry is driven by shale gas revolution and has led to a decrease in feedstock prices. The country witnessed a significant rise in the consumption of ethane surpassing the other petroleum products such as gasoline and jet fuel. Capital investments in the U.S. petrochemical industry rose from USD 97 billion in 2013 to USD 317 billion by 2017.
The development of new technologies based on feedstocks such as light crude and mixed crude is expected to positively impact the supply. The adoption of Crude Oil to Chemical Technology (COTC) by manufacturers is expected to gain popularity as it provides high yields in the range of 40% to 45%. Industrial complexes with COTC technology are being constructed in the Middle East and China and expected to be operational by 2020. The development of such technologies will enable companies to manufacture chemicals on a refinery scale.
The profit margin of the petrochemical companies declined sharply in 2015 and 2016 and thereafter increased at a moderate pace from 2017. The improvement in profit margins is supported by rebound in crude prices and rise in gross refining margins. The major factors that impact the operational costs is stabilization observed in raw material pricing. The high research and development costs associated with a downstream product along with regulatory clearances has affected the operating margins.
The rising possibility of an economic slowdown in 2020 is expected to have a deep impact on petrochemical manufacturing. Initially, slowdown in demand may result in lowered capacity utilization. It can also result in projects getting delayed or getting scraped. The compounding of the aforementioned problems results in profit margins taking a hit and companies struggle to find a proper balance in their product portfolio.
Based on product, the petrochemicals market has been segmented into ethylene, propylene, butadiene, benzene, xylene, toluene, and methanol. Major applications include polyethylene, ethylene oxide, polypropylene, SB rubber, ethylbenzene, solvents, polystyrene, and formaldehyde. Ethylene emerged as the leading product segment and accounted for 33% of the market volume in 2019.
Ethylene finds wide application scope as a feedstock in the construction, packaging, and transportation sectors. It is majorly utilized in the synthesis of various derivatives such as polyethylene, ethylene oxide, ethylene dichloride (EDC), ethylbenzene, and styrene. Rapid industrialization coupled with the growth of the automotive and packaging sectors in emerging economies is expected to boost consumption.
Polypropylene is widely utilized in the automotive industry owing to its superior mechanical properties and moldability and is expected to witness a volume-based CAGR of 4.0% from 2020 to 2027. Increasing demand for injection molded polypropylene from the electronics manufacturing industry is expected to boost its consumption significantly. It is also used in other applications such as housewares, bottle caps, toys, and luggage. Acrylonitrile derived from propylene is used in the manufacturing of acrylic fibers along with a variety of elastomeric polymers.
Benzene is expected to witness increased demand owing to increasing demand for manufacturing of inks, rubber, adhesives, paints, and varnishes. The advent of shale gas has changed the dynamics of the market for petrochemicals in North America, significantly. It has largely affected the supply of benzene in the region with the availability of ethane and lesser light cracking, resulting in low yields of benzene. It has resulted in increased dependency on imports from China and other Asian countries.
Increasing shale gas exploration activities in the U.S. and Canada are expected to drive the growth of the market for petrochemicals in North America. The countries together accounted for above 90% of shale gas production in 2018 in North America. The development of shale gas provides the advantage of substituting conventional feedstock such as crude oil and natural gas for producing various petrochemicals. The shale gas boom in North America has transformed industry participants in the region from high-cost producers of petrochemicals and resins to the lowest-cost due to the reduction of raw material prices. The steady growth in the demand from construction and automotive industries coupled with significant capacity expansions is expected to drive the growth of the market for petrochemicals.
The market for petrochemicals in Europe is marked by the presence of major industry participants such as INEOS, Shell Chemicals, and BASF. Western Europe is expected to witness stagnant growth owing to market saturation. The European petrochemical industry over the coming years is expected to witness more outages at crackers and polymer plants owing to demand fluctuations. Rising ethylene production in major countries such as Germany, France, and the U.K. is expected to augment the growth of the market for petrochemicals.
Abundant natural gas and crude oil availability are expected to drive the Middle East market. The region is increasing its strength in petrochemicals particularly in ethylene and its derivatives such as polyethylene (PE) and ethylene glycol. The major risk factors faced by manufacturers are the rising popularity of naphtha feedstocks and growing political tension.
Petrochemical companies are looking at acquisitions and mergers, and joint ventures with other key players to improve their market presence. By these operational integrations, companies are seeking to reach out to the maximum potential customer at optimum costs. In 2019, China National Petroleum Corporation signed an agreement with the Republic of Benin to construct the pipeline from Niger to the Atlantic coast in Benin to strengthen its crude oil business footprint in Africa. In August 2018, LyondellBasell acquired A. Schulman, Inc to strengthen its presence in growing high-margin end markets such as construction materials, automotive and packaging, and electronic goods.
Technological integration across the value chain is expected to be a major factor influencing market competition. The adoption of technologies such as drones, Internet of Things (IOT), robotics, blockchain, artificial intelligence, and cloud computing is expected to transform petrochemical manufacturing. It will help in improving safety monitoring and improve reliability and efficiency across the supply chain.
Base year for estimation
Actual estimates/Historical data
2016 - 2018
2020 - 2027
Volume in Million Tons, Revenue in USD Million & CAGR from 2020 to 2027
North America, Europe, Asia Pacific, Latin America, Middle East & Africa
U.S., Canada, Germany, the U.K., Belgium, France, Netherlands, China, India, Japan, South Korea, Indonesia, Saudi Arabia, and Brazil
Revenue forecast, company share, competitive landscape, growth factors and trends
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This report forecasts revenue growth at global, regional, and country-level and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global petrochemicals market report on the basis of product and region:
Product Outlook (Volume, Million Tons; Revenue, USD Million, 2016 - 2027)
Other (including alpha olefins, vinyl acetate, etc.)
Other (nitrile rubber, mechanical belts, etc.)
Other (including alkyl benzene, maleic anhydride)
Others (including pesticides, drugs, nitro toluene, etc.)
Regional Outlook (Volume, Million Tons; Revenue, USD Million, 2016 - 2027)
Middle East & Africa
b. The global petrochemicals market size was estimated at USD 441.0 billion in 2019 and is expected to reach USD 476.2 billion in 2020.
b. The global petrochemicals market is expected to grow at a compound annual growth rate of 5.0% from 2020 to 2027 to reach USD 651.1 billion by 2027.
b. Asia Pacific dominated the petrochemicals market with a share of over 50.0% in 2019. This is attributable to favorable regulatory policies in Asia Pacific and focus on development of the manufacturing sector.
b. Some key players operating in the petrochemicals market include BASF SE, British Petroleum Plc, Chevron Corporation, China National Petroleum Corporation (CNPC), China Petrochemical Corporation (SINOPEC), ExxonMobil Corporation, INEOS Group Ltd., LyondellBasell Industries Inc., Royal Dutch Shell PLC, and SABIC.
b. Key factors that are driving the market growth include rising demand for downstream products from end-use industries and capacity additions in the base chemical industry.
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The COVID-19 outbreak has significantly affected the petrochemical production output and supply chain across the world. The lockdown and travel restrictions in China have resulted in the declined consumption of petrochemical products in the country. China has also reduced the production output of petrochemicals as well as its downstream products such as polymers and synthetic rubbers due to a shortage of workforce and limited inventory. The reduced demand for oil and petrochemicals from China has resulted in a price decline of these products, thereby providing opportunities for countries such as India to procure oil at discounted prices. The updated report will account for COVID-19 as a key market contributor.