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DIRECTORY OF SINGAPORE PROCESS & CHEMICALS INDUSTRIES 2021/2022
Glowing prospects
for petrochemicals
As for petrochemicals, a material of choice in many commercial applications, the prospects are good. Precedence Research expects the global petrochemical market will grow at a compound annual growth rate of 5.1% from US$452.9 billion in 2020 to around US$729 billion by the end of 2030.
Petrochemicals is flexible enough to respond to changes in the market environment, Precedence Research noted. “While the pandemic drove down demand for petrochemical products from construction, manufacturing and textile industries, it stimulated a significant surge in demand for plastics used in medicine, hygiene and food packaging.”
Among all the products, ethylene, propylene, toluene, methanol and benzene are the most widely used, with ethylene being the most dominant. Used in various industries including transportation, construction and packaging, ethylene accounts for over a quarter of petrochemicals’ revenue. Asia is the largest source of both demand and supply, a dominance which is likely to continue.
The research also noted that over the forecast period, polypropylene, which is applied in paints, paper, detergent, electronics and adhesive industries, is expected to post some of the strongest gains.
Petrochemical processing will help to shore up the demand for oil as demand for fuels for transportation dips with the steady switch to hybrid or electrical vehicles to lower carbon emissions.
2020s. Light products refers to gasoline, diesel/ gasoil, jet fuel, kerosene and even biofuels.
By 2035, it expects demand to fall from between 2.8 million bpd and 11.7 million bpd from 2019 levels, depending on the pace of energy transition.
The decline will vary across various regions. It expects light product demand in North America and Europe to fall most sharply leading to permanent closure of refineries.
McKinsey noted that underpinning this prediction are six major shifts that affect long-term global energy demand: uptake of electric vehicles, efficiency gains and uptake of low-emission fuels for aviation and marine, increased demand reduction and recycling of plastics, cost reductions for renewables and storage, electrification of residential heat and electrification of European Union industry low and medium temperature heat.
While the refining industry is set to contract in some regions, demand for refined products will remain fairly significant even if the energy transition is accelerated. Worldwide, McKinsey estimates there could be refining capacity of 94 million bpd of liquids in 2035.
Said Tim Fitzgibbon, senior expert at McKinsey: “The downstream world is changing rapidly, and refiners must adapt to build in
resilience. First in core refining and retail operations – by embracing digitalisation, and potentially investing in decarbonisation and better integrating into petrochemicals – and then within the wider portfolio.
“Many refiners can capture pockets of growth by directing investments both into emerging markets and further down the value chain. They should also consider placing big bets on emerging value pools including new energy services, new mobility and advanced fuels. These shifts are essential to achieving every penny of potential profitability as the product and geographical market mix shifts beyond recognition.”
According to a study by data and analytics company, GlobalData, China will lead Asia’s refinery hydrocracking unit capacity additions, accounting for 56% of the regions’ total additions between 2021 and 2025. It expects China to develop new-build refineries with a total hydrocracking unit capacity of 803 thousand barrels per day (mbd) by 2025, while its expansion projects will account for the rest with 237 mbd.
Teja Pappoppula, oil and gas analyst at GlobalData, comments: “In China, eight new- build hydrocracking unit refineries are likely to start operations by 2025 while the rest are expansion projects. The planned Jieyang and Lianyungang I are the largest new-build
Demand shifts expected
to cut refining utilisation
Demand for refined products is beginning to shift. In its report ‘Global downstream outlook to 2035’, McKinsey & Company predicts that even in the case of a delayed energy transition, demand for light products, which largely drives refining utilisation, will plateau by the mid-
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