If we are to see a repeat of 87% in 2024-2030 (the green line in the chart) and assuming my forecast of 2% demand growth is correct, the increase in global capacity would need to average just 154,000 tonnes/year during each year between 2024 and 2030. This is versus our base case of 4.5m tonnes/year of annual increases.
Asian Chemical Connections
The blue line in the above chart involves annual average capacity growing at just 800,000 tonnes/year in each of the years between 2024 and 2030. This is versus our base case assumption of 7m tonnes/year of capacity growth during each of the years.
THERE ARE TWO scenarios or roads down which the petrochemicals industry could travel over the next ten years, with arrival either at Supermajors or Deglobalisation.
A petrochemicals world dominated by Supermajors, especially those running COTC plants, or one where greater regional cooperation (more on this in later posts) and increased protectionism allow older, smaller and less carbon efficient plants to survive.
SHORT-TERM tactics should involve maximising returns within regions along with a greater focus on exports anywhere in the world
I BELIEVE WE are heading for the biggest period of change in the global petrochemicals industry since the 1990s.
This was when globalisation took off with the formation of the World Trade Organisation (WTO), when China’s economic boom began, when the global population was more youthful and before climate change became a major threat to growth.
CHINA’S PP net imports could total 5m tonnes in 2040, or the country may instead be in a net export position of 9m tonnes.
Global HDPE capacity in 2024-2030 would need to be a total of 13m tonnes/year lower than our base case to return to the 2000-2019 operating rate of 88%.
CHINA’S 2024-2034 HDPE net imports could total as much as 105m tonnes or as little a 19m tonnes
Flat 2023-2050 demand growth in China and the developed world would leave the global market for nine synthetic resins 1bn tonnes smaller than the ICIS base case.