The major petrochemicals market in India can be roughly broken down into three segments: basic major petrochemicals, which is the second-biggest category, intermediaries, which is the largest segment, and other petrol-based chemicals (the smallest segment). Additionally, olefins and aromatics are separated into two subgroups based on their composition as building blocks for petrochemicals. Petrochemical products are a crucial component of daily life and are found in a wide range of goods, including plastics, fertiliser, digital devices, apparel, tyres, etc.

What Does The Current Global Trends Say?

Petrochemical demand has consistently increased and has outpaced crude oil demand on a global scale. Petrochemicals are expected to contribute for more than one-third of the growth in oil consumption through 2030 and nearly half through 2050, ahead of trucks, aviation, and shipping, according to the IEA. Plastics, one of the most widely used petrochemical products, have seen an increase in demand that has surpassed that of other bulk materials like cement, steel, and aluminium.

1)Limited Advantaged Feedstock

The petrochemical industry has relied on traditional feedstocks for the manufacturing of petrochemicals and their derivatives. North America and the Middle East (ME) have historically been the primary sources of these feedstocks for the industry; however, within the next five years, the potential for investments based on these traditional feedstocks will be constrained. For instance, it is predicted that in North America, traditional feedstock will fall over the next ten years as ethane demand rises due to export potential, among other things. 

Significantly, there may be new worldwide sources of advantageous gas supply in addition to the potential for the start of shale gas production in nations like Argentina. However, the quantity of opportunities and their introduction into markets could be somewhat limited.

3) Volatile Crude Oil Prices 

Since 2005, the price of crude oil, which is refined to make benzene, ethylene, propylene, and other compounds, has increased. In 2008, it peaked at almost USD 140 per barrel. However, as oil output in non-OPEC nations (notably the US) increased and the pace of global demand slowed by 2014, prices progressively dropped from close to USD 108 per barrel to roughly USD 34 per barrel by January 2015. 

In addition, the US Energy Information Administration (EIA) reports that as of January 2021, the price per barrel of US crude oil was $36.86, down from $62.64 in August 2018 and $55.65 in November 2018. This shows how the Petrochemical markets are impacted by the sharp price changes, creating uncertainty.

The cheap gas feedstock windfalls and demand explosion in emerging markets that characterised the global petrochemical industry's initial stages of expansion are beginning to fade. Global petrochemical businesses must prepare for a more difficult playing ground. A fresh emphasis on operations excellence, this time strengthened by digital and advanced analytics, will be a key component of success. But in order to seize the new wave of value-creating opportunities that are emerging, future competitors will also need to make big strategic decisions to support that.