26 March 2014 22:42 [Source: ICIS news]
HOUSTON (ICIS)--Global ethylene demand will rise by about 3% a year until 2040, driven in large part by an expanding middle class in developing countries, ExxonMobil Chemical president Stephen Pryor said on Wednesday.
That projection is drawn from the company's Outlook for Energy, released in December 2013.
About 60% of the demand growth will come from developing countries, and half of that growth will come from China, Pryor said during a luncheon address at the IHS Chemical World Petrochemical Conference.
Major factors in China's growth will be rising prosperity, with a per capita expected to be five times higher in 2040 than in 2010, and urbanisation, with 75% of the population expected to be living in cities by 2040, he said.
While China is expected to lead the world in GDP growth through 2040, the outlook is bright in other developing countries as well. India's middle class will grow tenfold by 2025 and by 2030 most African countries will have a middle-class majority, he said.
As demand grows, the supply market will become more globalised, with the volume of chemicals traded between regions rising to 20% of global capacity by 2020 from 10% today. Supply growth will come from wherever the advantaged feedstock is, he said.
Right now, the shale boom is giving a feedstock advantage to North America, which is expected to double its exports of polyethylene (PE), polypropylene (PP) and paraxylene (PX). Chemical capacity is set to increase in the US, with more than $100bn in planned projects announced, Pryor said.
But continued industry growth in the US depends on how the country deals with two potential issues – regulations and skilled labour.
Permits for pipelines, plants and export facilities are being held up by a system that allows limitless challenges, resulting in projects being stalled or cancelled. Timely permitting could be a boon to the industry and to the jobs it would create, he said.
A longer-term problem is the shortage of skilled labour in the country, a problem not limited to the chemicals industry. US students show a declining interest and proficiency in science, technology, engineering and math (STEM) disciplines, he said.
To deal with that, the US energy and chemicals industries must be leaders in strengthening STEM education in high schools, technical schools and colleges, he said.
The IHS Chemical World Petrochemical Conference runs through Friday.
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