It is the time when the organizations are covering up the yearly turn-around, financial departments are in run to close the yearly books, and associations are sharing their foreseeability into the next year. Let us assess, what is expected to unravel next year and years to come in petrochemical industry.
The US Market – The future looks optimistic for the US, with numerous ongoing plant constructions and planned capacity expansions. Prospects of strong global growth, increase in domestic manufacturing capabilities, favorable shale economics, and healthy demand from end-use industries are key factors driving the growth of chemical industry in the US. Major growth is expected to come from sectors of agrochemicals, paints & coatings, consumer chemicals, and petrochemicals. The American Chemistry Council (ACC) predicted that the revenues from chemical industry in the US shall exceed $700 billion, widening trade surplus to $71.4 billion by 2023.
The Asian Market: The engine of Asian chemicals industry growth, the combination of markets of China, India, and South Korea, is expected to run fiercely in coming years. There have been numerous expansions and plant installations, especially in developing above mentioned countries. The insatiable demand from Chinese factories and growing domestic consumption with high growth in countries such as India, Indonesia, and Philippines, are drawing favorable picture for Asian Chemical Industry. Further, increasing investments, such as BASF’s $10 billion investment in China, Lotte’s expected more than $3.5 billion investment in Indonesia, and China National petroleum corporation’s (CNPC’s) $9.5 billion investment in petrochemical and refinery complex are some of the prominent recent investments which provides assurance of increased market revenues when these plants come online in coming years.
European Market – The European chemical industry does not show very good expectations for the coming years. Recently, when the European Union issued industry performance snapshot, the results indicated decline in Chemical industry sectors (except for consumer chemicals). Even, the trade surplus declined from by €0.6 billion for first eight months. With BREXIT on the cards, and uncertain tension in Eastern Europe around Russia, coupled with low crude oil prices, the market is not expected to show any great turnaround in coming few years. However, it is not all gloomy in Europe. The chemical industry has shown overall slight growth in output, touching highest sales in six years, and increasing the chemical exports. The is demand is expected to pick-up with expected economic revival in Eastern region and more demand from end-use industries.
Rest of the World – Africa, Middle East, and Latin America are expected to show progressive signs in coming years. The expected boost in African market, revival of Middle East Economies, and relatively more politically stable Latin America are expected to drive the demand in these regions. Low per capita consumption and increasing investments driven economic growth pushing affordability are expected to be drivers of growth. However, the changing global geopolitical scenarios and proxy wars have always caused trouble in parts of these geographies. The scenario is expected to improvise slightly over next five years, increasing the growth of chemical industry there.
Global market as a whole seems optimistic in the next five years, with few precautionary signs. Changing trade policies with increasing protectionism, changing geopolitical scenarios, and ballooning proxy war damages have been cause of concern which are expected to restrict the potential of expansion in coming years as well. Only future will tell what it holds, we can only assess and hope for better outcome.
– Ankur Kalra,
Manager – Chemicals & Materials,