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The global petrochemicals market size was USD 371.9 billion in 2020. The market is projected to grow from USD 582.4 billion in 2021 to USD 888.3 billion in 2028 at a CAGR of 6.2% in the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with witnessing a negative impact on demand across all regions amid the pandemic. Based on our analysis, the global market exhibited a decline of 15.7% in 2020 as compared to the average year-on-year growth during 2017-2019. The rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
Petrochemicals are chemical substances made mainly from natural gas, coal, and oil. It makes consumer products such as shampoos, detergents, aspirin, gasoline, pesticides, carpeting, milk jugs, and others. Products such as propylene, ethylene, benzene, and xylene are used in packaging, plastics, rubber, and electronics. Increasing demand in automotive, consumer goods, medical, packaging, construction, and other industries will drive the global petrochemicals market growth.
Impact on Supply Chain has led Companies to Reassess their Manufacturing Practices
COVID-19's outbreak and the economic slowdown had a mixed impact on this market. During the early phases of the pandemic, demand for ethylene increased significantly due to a rise in demand from the packaging industry. This substantial increase in demand can be linked to increased consumption of consumer goods that employ polyethylene as a packaging material. Demand for polyethylene from food, sanitary products, and medical industries increased significantly over this period. On the other hand, demand from construction and automotive industries demonstrated a sharp decline owing to lockdown restrictions imposed by governments across the globe. COVID-19 had a minor impact on bulk supply chains and prompted companies to reassess their manufacturing practices. The majority of companies were able to take the necessary measures to safeguard their employees and keep plants operational to provide the necessary chemicals to combat the pandemic. Despite a few plants shutting down in certain regions, industry players have managed to weather the storm. Another notable event that occurred at the pandemic's peak was when crude oil prices fell dramatically, putting oil-producing regions such as North America and the Middle East at a disadvantage. However, it provided an opportunity for oil-importing countries such as South Korea, India, and China to establish strategic crude oil reserves for their businesses. Demand from end-use industries such as automotive and construction has begun to rebound as major economies worldwide recover from the damages caused by COVID-19, but the emergence of new virus variants continues to create a high level of economic uncertainty.
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Rising Environmental Concerns by Manufacturers May Propel Market Growth
In response to mounting environmental concerns, policymakers have urged companies to take initiatives and operate the production process environment-friendly and sustainably. Several key players are upgrading their operations to meet new pollution control regulations, as limiting pollution from production facilities could be critical in limiting pollution and mitigating the impact of climate change. For example, in October 2021, Dow announced constructing the world's first net-zero carbon integrated ethylene cracker and derivatives plant in Alberta, Canada. Dow anticipates that the new brownfield ethylene cracker will add approximately 1.8 million tons of capacity in phases through 2030. This, combined with additional derivatives capacity and site retrofit investments, will enable the company to produce and supply approximately 3.2 million tons of certified low- to zero-carbon emissions polyethylene and ethylene derivatives for customers and joint venture partners globally. Another instance of an industry player taking the initiative toward going green was reported in September 2021, when MEGlobal Americas Inc. announced that beginning in 2023, it would purchase renewable energy from Calpine Energy Solutions LLC to meet 100% of the expected power demands for its petrochemical plant in Texas, United States The deal demonstrates EQUATE Petrochemical Group's strong commitment to sustainability, of which MEGlobal is a part.
Rising Plastic Consumption in Developing Economies is Anticipated to Drive Market Growth
A major portion of petrochemicals produced is consumed to manufacture plastics such as polyethylene, polypropylene, and polystyrene. The demand for such plastics significantly increased over the past few decades, such as plastic packaging, for food and other commercial products, especially in major end-use industries. The trend will continue rising during the forecast period, especially in developing countries of Latin America, Asia Pacific, and Africa. In spite of the rising efforts to encourage recycling and curb single-use plastics, the difficulty in finding cost-effective and eco-friendly alternatives to petrochemical-based plastics to meet the significantly rising global consumption rate is yet to be found. According to the International Energy Agency's assessment, the U.S., Europe, and other established economies consume up to 20 times as much plastic as Indonesia, India, and other developing countries on a per capita basis, presenting enormous potential for market expansion. Plastic extends the shelf life of food, reduces food waste, and its low weight reduces fuel consumption when transporting goods. It offers immediate economic benefits and can assist in resource optimization, which are critical in the growth of emerging economies. Consumer product demand is expected to increase in developing economies, owing to the rising purchasing power of a major population segment. This is anticipated to increase plastic consumption, which will drive the market growth.
Harmful Effects Caused by Petrochemical Products are Likely to Hinder Market Growth
Rising health and environmental concerns over hazardous products in daily life may restrict the market growth. Due to the availability of information, the number of environmentally conscious consumers across the globe is increasing. This is likely to encourage more industries to provide environmentally sound consumer products. Petrochemicals such as benzene are not only toxic for the environment but have also been found to be carcinogenic in humans, according to the International Agency for Research on Cancer (IARC). Short-term exposure to this feedstock can cause narcosis, eye irritation, and skin irritation, while long-term exposure can cause serious health problems such as anemia, lowered immunity, and cancer. Plastic pollution is currently one of the world’s most challenging crises. It's been building up at an alarming rate in the oceans, and it's now nearly everywhere on the planet. Microplastics, which are formed due to the breakdown of macroscopic plastics, have a wide range of environmental impacts. Microplastics contaminate the oceans and are ingested by aquatic creatures, resulting in higher amounts of these plastic particles entering our food chain. In collaboration with the private sector, governments and international organizations are establishing criteria and methodology for assessing the environmental impacts of these products throughout their entire life cycle. This is likely to result in stricter health and environmental regulations limiting hazardous products. This, in turn, will hinder the market growth.
Ethylene Segment to Dominate Market
Based on type, the market is segmented into ethylene, propylene, methanol, xylene, and others.
The ethylene segment is expected to dominate the market in the coming years. Technological advancement has increased plastic usage among consumers, which shall augment the ethylene market size. It is used to produce plastics for automotive, packaging, construction, and consumer goods industries. Due to construction activities, the growing demand for HDPE shall favor the industry growth.
The propylene segment is likely to witness significant gains during the forecast period. Chemical grade propylene is very versatile, preferably used in manufacturing many common household items, including chemical solvents, acrylic yarns, shampoos and soaps, cleansers, foam padding, and contact lenses. Propylene gas is used in various industries such as construction, packaging, and automotive.
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Packaging Segment to Hold Major Share over Forecast Period
On the basis of the end-use industry, the market is segmented into packaging, electronics, construction, automotive, and others.
Packaging accounted for the major market share in 2020 and may continue its dominance during the forecast period. The petrochemical industry requires specialized equipment and containers to ensure the safe packaging of products. The product is used for both food and non-food packaging. Modern wrapping materials keep the food safe and fresh. Also, based on petrochemicals, liners prevent food contact with packing materials that could react with the content.
The automotive industry may witness a significant growth rate during the foreseeable timeframe. The automotive industry uses petrochemicals to increase company sales as they are a vital part of automobile manufacturing. The advantages of using intermediaries in the automobile industry includes weight reduction, less fuel consumption helping in pollution control, reducing assembling time, and ease in processing.
Asia Pacific Petrochemicals Market Size, 2020 (USD Billion)
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The market in Asia Pacific is expected to dominate owing to rising demand from the consumer goods industry. Rapid economic expansion in emerging economies, such as China, India, and other ASEAN countries, resulted in a surge in demand for petrochemical products such as plastics, fertilizers, packaging, apparel, electronic gadgets, medical equipment, detergents, and tires. As the region's dominant player, China has been actively investing in the transition to alternative feedstock such as naphtha and natural gas for petrochemical manufacturing, rather than relying on coal-to-chemical manufacturing to supply raw materials to its massive domestic industrial base. Additionally, over the last decade, the region's crude oil refining capacity additions have expanded significantly, and this upward trend is expected to grow during the forecast period. As people's spending power rises, demand for consumer goods is expected to rise as well. Rising demand from the consumer products industry is anticipated to prompt the construction of new petrochemical complexes in the region, which will benefit and result in market growth.
The market in North America is expected to witness significant growth owing to rising investments in petrochemical production facilities. As a result of technological advances, particularly shale oil production by hydraulic fracturing, the region's upstream petroleum sector has expanded significantly in the last decade. The region's oil and gas output has exceeded domestic fuel demand. Investors are likely to focus their efforts on value addition and the development of new production units. The availability of surplus crude oil and the plan of several major global chemical corporations to expand or build new facilities in the region are expected to drive market growth.
The Europe market is anticipated to expand steadily and is currently undergoing significant structural changes due to major challenges. Among the challenges are rising energy and feedstock prices and increased competitive pressure from other countries. The EU petrochemical sector is heavily regulated due to concerns about health, safety, the environment, and climate change and energy. As a consequence of all of these issues, the EU's share of global petrochemical production has been declining, with fewer investments in new facilities. However, several countries in the EU have been actively investing in the chemical sector's green and digital transition.
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The Latin America and Africa markets are expected to witness sluggish growth due to their poorly developed industries. The Middle East market is anticipated to expand during the forecast period due to a rise in investment in developing domestic petrochemical infrastructure. Oil-producing countries in the Middle East, such as Saudi Arabia and others, are aware of this reality and are investing heavily in expanding their domestic petrochemical assets to capitalize on the region's cheap and readily available oil and gas. This, in turn, is likely to benefit and drive the market growth.
Companies are Engaged in Strategic Initiatives such as Acquisition and Collaboration to Expand Business and Gain Competitive Edge in Market
The global market share is competitive, with key players operating in the industry are INEOS, BASF SE, SABIC, and others. Most manufacturers are engaged in acquiring, collaborating, and establishing new production units, which is likely to expand the overall business and their potential customer reach.
For instance, in August 2021, Adani Group established Adani Petrochemicals to join the market. The company will build refineries, petrochemical complexes, specialty chemicals units, hydrogen and related chemical plants, and similar facilities.
An Infographic Representation of Petrochemicals Market
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The global report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, types, and end-use industries. Also, the report offers insights into petrochemicals market trends and highlights the vital market outlook with developments. This report includes historical data & forecasts revenue growth at global, regional, and country levels and analyzes the industry's latest market dynamics and opportunities. In addition to the factors mentioned above, the report encompasses various factors contributing to the market's growth in recent years.
Value (USD Billion), Volume (Million Tons)
By Type, End-use Industry, and Region
By End-use Industry
Fortune Business Insights says that the global market size was USD 371.9 billion in 2020 and is projected to reach USD 888.3 billion by 2028.
In 2020, Asia Pacific stood at USD 164.2 billion.
Growing at a CAGR of 6.2%, the market will exhibit steady growth during the forecast period (2021-2028).
Packaging is expected to be the leading segment in this market during the forecast period.
Rising plastic consumption is expected to drive the growth of the market.
BASF SE, INEOS, SABIC, and Sibur are the major players.
Asia Pacific dominated the market share in 2020.
Increasing demand in automotive, consumer goods, medical, and packaging industries is expected to surge the product adoption.
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