While increased efficiency standards and the rapid growth of EVs will reduce the growth rate for transport fuels, demand for feedstocks will continue to grow at strong rates. Demand for petrochemical feedstocks such as ethane, LPG, naphtha and synthesis gas goes beyond transportation — to the plastic, rubber and synthetic-fibre building blocks for products like shirts and consumer goods packaging. These items consistently have demand growth rates above GDP and will keep things running smoothly for the chemicals industry.
How are energy companies responding to declining oil demand? Many have begun to reevaluate their chemicals strategies. We’re seeing major energy companies aggressively expanding their current chemicals portfolio, forming alliances with chemical companies, or stepping into the chemicals space for the first time.
As part of our coverage on peak oil demand, we asked Stephen Zinger, Senior Vice President – Chemicals and expert on the PCI Wood Mackenzie research team, to share his view on what will drive chemicals demand and how companies are responding to the likelihood of peak oil demand.
Will the chemicals industry shift focus to renewable sources?
As oil majors look to invest in petrochemicals as a growth driver of oil demand in the future, biochemicals and polyester recycling could squeeze this growth. Like any new technology, there are challenges to producing bioplastics at the same scale as traditional plastics. Provided these challenges can be overcome, we expect bioplastics to become a much larger portion of the supply — potentially eroding a portion of oil demand. At higher crude prices, the squeeze on oil demand will be even more significant. Some majors are already addressing this by getting involved with investments, consortium groups or funding technologies for developing biomass sourcing into either chemicals or plastics.
And what about polyester? Polyester sustainability is focussed on alternative routes via biomass or coal. The versatility and scalability of polyester means we expect demand growth to continue at 4-5% for the next five years, driven primarily by Asian fibre markets. Both cost and environmental benefits are urging producers and consumers to establish genuinely sustainable supply chain sourcing strategies and select suppliers who can deliver low carbon polyester products.
Next in our peak oil demand series, we’ll look more closely at the impacts of peak demand on the power and renewables market. Read our coverage on how peak oil demand could affect companies and the upstream, supply chain, metals and refining industries.
Join us at the 2017 Americas Chemicals Conference in Houston
Are we there yet? The anticipation of new capacity in the US Gulf Coast (USGC) continues to build, with definite impacts on global markets and trade. Once everything comes on-line, how will the USGC build-out trigger global reactions? How do things change when factoring in recent developments in the economy, politics and energy prices? Join us in Houston on Thursday, November 30, 2017 as we focus on these looming questions.
Source: Wood Mackenzie