Petrochemicals Market Size, Share & Industry Analysis, By Type (Ethylene, Propylene, Methanol, Xylene, and Others), By End-Use Industry (Packaging, Electronics, Construction, Automotive, and Others), and Regional Forecast, 2024-2032

The global petrochemicals market size was valued at USD 623.83 billion in 2023 and is expected to grow from USD 649.16 billion in 2024 to USD 900.91 billion by 2032 at a CAGR of 4.2% during the forecast period. Asia Pacific dominated the petrochemicals market with a market share of 52.16% in 2023. Moreover, the petrochemicals market in the U.S. is projected to grow significantly, reaching an estimated value of USD 105.76 billion by 2032, driven by the increasing government initiatives towards recycling and sustainability.

Petrochemicals are chemical substances derived from crude oil, coal, and natural gas. Over the years, their definition has expanded to include a range of aliphatic, aromatic, and naphthenic organic chemicals. Products derived from petrochemicals, such as chemicals, plastics, and synthetic materials, have bolstered market growth. These products are used in various end-use industries, such as packaging, electronics, construction, and automotive industries. As these industries grow and evolve, the demand for petrochemical products is anticipated to increase.

The COVID-19 pandemic initially disrupted the market, causing reduced demand and supply chain disruptions. However, as global economies recovered, the petrochemical industry experienced a resurgence. Increased industrial activities, resumption of construction projects, and growing demand for petrochemical products contribute to the market’s recovery, signaling a positive outlook for the sector.

Petrochemicals Market Trends

Increasing Demand for Electrification and Energy Storage Systems to Bolster Market Growth

The electrification and energy storage systems require a variety of petrochemicals, including ethylene, propylene, and benzene. The demand for energy storage systems is ramping up as they are used to store energy from renewable sources, such as solar and wind power. Petrochemicals are used to make the components of energy storage systems, such as batteries and capacitors. As the demand for energy storage systems increases, advancements in this industry are expected to create opportunities for petrochemical-derived products.

The rising need for electrification and energy storage systems is anticipated to accelerate the expansion of the market significantly. The demand for innovative battery technology is expected to increase as the global shift toward electric vehicles and renewable energy sources gains traction. Moreover, petrochemical companies are expected to benefit from this trend as their products are critical in batteries. Petrochemical-derived materials are significantly used in key components such as cathodes, anodes, and electrolytes. As a result, expanding electrification and energy storage systems demand creates profitable prospects for companies to extend their market presence and capitalize on the growing demand for energy-efficient solutions.

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Petrochemicals Market Growth Factors

High Demand for Plastic and Polymers in Automotive Industry to Drive Market Expansion

The automotive industry is a prominent driver of the market due to the high adoption of petrochemical products in a variety of applications. These products are used to make a variety of components required for vehicle production and operation. Manufacturers of plastics and polymers are major contributors to product demand in the automotive sector. Plastics are widely utilized in automotive production for components such as bumpers, interior panels, dashboards, and other nonmetallic parts. These materials help to reduce total vehicle weight, improve fuel efficiency, and meet stringent emission standards.

Rubber, a petrochemical byproduct, is also a key component in tire production. Tires require synthetic rubber to improve performance, durability, and safety. The demand for high-performance tires, driven by customer safety and comfort concerns, fuels the adoption of rubber. Petrochemicals are used in the automotive industry for lubricants, adhesives, and a variety of fluids, in addition to structural components. Lubricants are critical for the proper functioning of engines and transmissions, while adhesives, sealants, and coatings are used in car assembly.

Furthermore, developments in automobile technology, such as electric and hybrid vehicles, drive product demand. These vehicles use lightweight materials and specialized polymers in their battery systems, interiors, and structural components. The automotive industry’s requirement for petrochemicals is diverse, spanning structural materials, tires, lubricants, adhesives, and materials for developing technologies further bolstering the market demand. 

Expanding Packaging Industry to Propel Market Growth

The growing packaging industry is a significant market driver due to its prevalent reliance on petrochemical-derived materials, particularly plastics. The expansion of the packaging industry is profoundly related to rising global consumption and urbanization trends. As the urban population grows, so does the demand for packaged goods. Petrochemical-derived plastics provide a diverse range of cost-effective and versatile packaging materials, making them the preferred choice for industries ranging from food & beverages to personal care and consumer goods. The packaging industry’s ability to respond to increasing global consumption patterns largely bolsters the petrochemicals market growth.

Furthermore, e-commerce has transformed the packaging industry, with businesses seeking customized solutions that safeguard products throughout transportation and improve consumer experience. Petrochemical-derived plastics provide the adaptability required for producing packaging materials that meet the specific needs of various products and delivery methods. Plastics are useful in producing protective and visually pleasing packaging for the e-commerce sector since they are lightweight, robust, and cost-effective. As e-commerce continues to thrive, the packaging industry’s demand for petrochemical products is anticipated to rise during the forecast period.

The packaging industry’s pivotal role in catering to the needs of a rapidly urbanizing global population, its capacity for innovation and customization, its alignment with the evolving landscape of e-commerce, and its commitment to meeting health and hygiene standards have collectively fueled the demand for these products. As long as consumer lifestyles and market dynamics continue to drive the demand for packaged goods, the packaging industry’s reliance on petrochemicals, particularly plastics, is poised to remain important in shaping the market trajectory. 

RESTRAINING FACTORS

Harmful Effects Caused by Petrochemical Products May Hinder Market Growth

Plastic pollution is currently one of the world's most challenging crises, building up at an alarming rate in oceans and is now pervasive globally. The vast majority of plastics and polymers produced globally are based on petrochemicals.

The rising health and environmental concerns over hazardous products in daily life are expected to hamper market growth. Due to the availability of information, the number of environmentally conscious consumers across the globe is increasing. This is anticipated to encourage more industries to provide environmentally friendly consumer products.

Moreover, microplastics, formed due to the breakdown of macroscopic plastics, have a wide range of environmental impacts. They 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 methodologies for assessing the environmental impacts of these products throughout their entire life cycle. This is anticipated to result in stricter health and environmental regulations limiting the use of hazardous petrochemical products. This, in turn, is expected to hinder market growth.

Petrochemicals Market Segmentation Analysis

By Type Analysis

Ethylene Segment Commands Market Leadership Due to Its Versatility

Based on type, the market is segmented into ethylene, propylene, methanol, xylene, and others.

The ethylene segment accounted for the largest share in 2023. This segment dominated the market due to its versatility and usage in producing polyethylene, ethylene glycol, and vinyl chloride. The increasing consumption of consumer goods, such as packaging materials and household items, bolsters the ethylene demand.

The propylene segment is expected to be the second fastest-growing segment during the forecast period owing to the growing demand for plastic manufacturing, such as polypropylene, which is widely used in consumer goods, automotive, and packaging goods. A propylene-derived product such as propylene glycol is used in various industrial products such as cosmetics, antifreeze, and pharmaceuticals.

Methanol’s demand is propelled by its consumption as a feedstock in producing formaldehyde, acetic acid, MTBE, and plastics. Formaldehyde is used in end-use industries such as adhesives, plastics, and resins. Moreover, MTBE is used as an octane booster in gasoline.

In addition, xylene is utilized to produce purified terephthalate acid, which is used to produce polyethylene terephthalate (PET), which in turn is a major component of bottles and synthetic fibers.

By End-Use Industry Analysis

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Packaging Segment Dominated Due to Growing Consumer Goods Industry

In terms of end-use industry, the market is segmented into packaging, electronics, construction, automotive, and others.

The packaging segment accounted for the largest global petrochemicals market share in 2023. In packaging, the product demand is backed by the expanding consumer goods industry, rapid growth in e-commerce, and the need for lightweight and durable packaging materials. The rising demand for plastic packaging, especially in food and non-food packaging, is further propelling the segment’s growth.

Petrochemical-derived products, such as resins, plastics, and specialty chemicals, are vital for producing circuit boards, lightweight components, and other electronic parts. The global demand for electronic devices is growing rapidly due to increasing demand for smartphones, laptops, and other electronics. Hence, the electronics segment is expected to create significant opportunities for this market.

In the construction industry, the product is mostly used in pipes, adhesives, and coating for numerous applications, such as pipes, insulation, flooring, wiring, and structural components. The rising demand for infrastructure and growing demand for housing are further expected to bolster the product demand.

The automotive industry may witness a significant growth rate during the forecast period. The advantages of using intermediaries in the automobile industry include weight reduction, less fuel consumption, helping in pollution control, reduced assembling time, and ease of processing.

REGIONAL INSIGHTS

Based on geography, the market is studied across Asia Pacific, South America, North America, Europe, and the Middle East & Africa.

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The market size of Asia Pacific stood at USD 325.44 billion in 2023, driven by increasing industrialization, urbanization, and demand for consumer goods in the region. As per the Association of Packaging and Processing Technologies, Asia Pacific’s packaging industry was valued at over 1.7 trillion units in 2022 and is projected to gain significant momentum due to rapid urbanization, increasing per capita consumption, and the booming e-commerce sector.

Moreover, China is the largest consumer of petrochemicals in the region. Its perused self-sufficiency policy has positioned it as the world’s largest chemical producer. Its self-sufficiency also allows the region to expand rapidly and gain a significant advantage over other economies. Rapidly growing electric mobility and the large presence of the traditional automotive industry are set to drive consumption and propel the market in China.

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Technological advances in North America, particularly shale oil production through hydraulic fracturing, have driven the region's petroleum sector in the last decade. The oil & gas output has surpassed the domestic fuel demand in the region, and investors are expected to increase their efforts on developing new production units. The availability of crude oil and the plan of multiple global chemical corporations to construct new or expand existing facilities in the region are expected to boost regional growth significantly.

The U.S. held a dominant market share in North America in 2023 and is projected to maintain its dominance throughout the forecast period. The country is among the top 10 petrochemical producers generating significant demand from end-use industries such as automotive, construction, and paints & coatings. Moreover, increasing government initiatives toward recycling and sustainability are expected to fuel the demand for green petrochemical products in the region.

As per the data released by The European Chemical Industry Council in 2023, petrochemicals accounted for over one-fourth of the total European chemical market. In addition, Europe has prominent industries, including metal, automotive, and plastics. The European market is expected to grow steadily and is currently undergoing noteworthy structural changes due to rising energy and feedstock prices and increased competitive pressure from other countries. The Europe petrochemical sector is regulated due to concerns about health, environment, climate change, safety, and energy. As a result of these regulations, Europe's share in the global market is expected to decline during the forecast period. However, several large companies present in European countries have been investing in the green and digital transition of the chemical sector.

The market in South America is expected to grow at a below-average rate during the forecast period owing to the poorly developed industries in the region. However, the rising demand for petrochemical-based products, including plastics, dyes, and thinners from the automotive and construction industries, is expected to support the market growth in the region. According to the International Monetary Fund, South America's economic growth is expected to slow down in 2023 to 1.6% compared to the previous year, with a growth rate of 4%. Moreover, Brazil and Argentina are expected to face an economic slowdown with an estimated growth rate of 1.5% to 2% till the midterm forecast.

The U.S. Energy Information Administration notes that Saudi Arabia ranks as the world's second-largest oil producer. Nevertheless, with oil plant shutdowns in Europe and a decline in Russian oil output, the Middle East is shifting its emphasis towards petrochemical ventures instead of refining. Furthermore, Gulf nations are efficiently meeting rising demands by capitalizing on abundant raw materials, extensive energy reservoirs, and cost advantages compared to developed counterparts.

List of Key Companies in Petrochemicals Market

Investing in New Technologies and Business Expansion is a Strategic Initiative Implemented by Companies

Key players in the market include BASF SE, China National Petroleum Corporation, Dow Chemical Company, INEOS, SABIC, and Shell plc. Many of these entities are actively engaged in innovation and substantial investments in new technologies to meet the increasing demands from various end-use sectors. For example, Dow has announced intentions to construct the inaugural net-zero carbon emissions integrated ethylene cracker and derivatives site, aimed at augmenting the company's production capacity by 1.8 million metric tons by 2030.

Numerous players are channeling investments into research and development endeavors to refine production processes and foster sustainable solutions. BASF SE, for instance, allocated approximately USD 2.5 billion in 2022 towards research initiatives and personnel to cultivate sustainable solutions. Moreover, some firms are broadening their global footprint through mergers and acquisitions. Shell plc, with a presence in over 70 countries, supplied upwards of 12 million tons of petrochemicals to more than 1,000 industrial clients worldwide in 2022

LIST OF KEY COMPANIES PROFILED:

• BASF SE (Germany)


• LyondellBasell Industries Holdings B.V. (Netherlands)


• INEOS (U.K.)


• Shell plc (U.K.)


• SABIC (Saudi Arabia)


• Reliance Industries Limited (India)


• Mitsubishi Chemical Corporation. (Japan)


• Dow Chemical Company (U.S.)


• LG Chem (South Korea)


• Chevron Phillips Chemical Company LLC. (U.S.)


• China National Petroleum Corporation (China)


• Maruzen Petrochemical Co., Ltd. (Japan)

KEY INDUSTRY DEVELOPMENTS:

• January 2024 – LyondellBasell announced a deal to acquire a 35% stake in Saudi Arabia’s National Petrochemical Industrial Company (NATPET) for over USD 500 million. The joint venture, facilitated by its spheripol polypropylene (PP) technology, positions LYB to grow and enhance its core PP business by providing access to advantageous feedstocks and increasing product marketing capacity in a critical region.


• January 2024 – SABIC Fujian Petrochemicals Co. Ltd, a joint venture between Fujian Fuhua Gulei Petrochemical Co., Ltd. and SABIC Industrial Investment Company, announced the establishment of a complex at Fujian’s Gulei Industrial Park. This marks another milestone in SABIC’s investment strategy in China, with a projected investment of USD 6.4 billion.


• June 2023 – BASF announced the commencement of a new PE plant in China with a capacity of 500,000 metric tons of PE annually. Zhanjiang Verbund site would provide reliable and high-quality PE products for application, such as blow molded parts for households, specialty films, and industrial chemical containers.


• October 2023 – BASF announced the expansion of its ethylene oxide and derivatives complex at its Verbund site. The company is adding 400,000 metric tons per year to its production capacity, with investment exceeding USD 529.3 million. The expansion enhanced the company’s market position in Europe, bolstered by rising customer demand for alkoxylates in industrial, institutional, and home care applications.


• August 2023 – INEOS formed a 50:50 joint venture with SINOPEC for the ethylene project at Tianjin Nangang, which is currently under construction by SINOPEC. The petrochemical project includes a 1.2 million tons per annum cracker and a new 500 kilo-tons per annum high-density polyethylene plant.


• March 2023 – SABIC signed an agreement with Coolbrook to decarbonize ethylene production by assessing Coolbrook’s Roto Dynamic ReactorTM (RDR) technology. SABIC is committed to carbon neutrality by 2050 and a 20% reduction by 2030.

REPORT COVERAGE

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The research report provides a detailed market analysis and focuses on crucial aspects such as leading companies, types, and end-use industries. In addition, it provides quantitative data regarding volume and value, market analysis, research methodology for market data, insights into market trends, and highlights vital industry developments and competitive landscape. In addition to the abovementioned factors, the report encompasses various factors that have contributed to the market growth in recent years.

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