Petrochemicals are an essential component to the production of many different products. Because so many other industries demand petrochemicals, this industry is usually stable, even during times of recession. The one major concern of the industry involves fluctuations in the price of oil and gas, as sharp decreases can make dramatic impacts on industry revenues.
From 2012-2017, the petrochemical industry saw significant revenue reductions as crude oil prices bottomed out. Natural gas pricing saw strong dips as well. In 2015, the price of crude oil fell by over 47%, while natural gas prices fell by 40%.
Even with these challenges, the U.S. petrochemical industry brings in an average of $54 billion in revenues each year. About 60 businesses are currently active in the industry from a manufacturing standpoint, which supplies about 10,000 direct employment opportunities to the U.S. economy. Since 2012, the industry has been seeing an average decline of 9.7%.
Important Petrochemical Industry Statistics
#1. 73% of the chemicals and petrochemicals sector’s total energy use came from the production of methanol, ammonia, and HVCs in 2014. From 2009-2014, these three sectors grew by 51%, 13%, and 19% respectively. (International Energy Agency)
#2. 28% of industrial final energy consumption is handled by the chemicals and petrochemicals sector, with 58% of total energy inputs being consumed as feedstock. (International Energy Agency)
#3. Average annual growth within the process energy consumption sector, with direct energy-related carbon dioxide emissions, was 2.3% and 2.6% respectively since 2000. Energy use as feedstock for the petrochemical industry grew at 2.3% over this same time period. (International Energy Agency)
#4. 45% of global petrochemical feedstock consumption involves naphtha. 34% of consumption involves ethane. This is followed by propane (8%), butane (5), and gas/oil (5%). (CMAI)
#5. In 2015, 32% of the global upstream capacity of the petrochemical industry was for ethylene. 20% was dedicated to propylene, while 18% was dedicated to methanol. In total, the global upstream capacity for the industry was 481 MTA. (Morgan Stanley)
#6. 28% of the global demand for petrochemical products comes from the packaging industry, which is the petrochemical industry’s top customer. Electronics are responsible for 19% of revenues, while the construction industry provides 14%. (Nexant)
#7. Each feedstock offers a different composition of hydrocarbons, which means the petrochemical products offer different yields. Using natural gas to produce ethylene creates an 80/20 ratio for ethylene and other products. Using naphtha returns a 30/70 yield for ethylene. (Macquarie Research)
#8. The Middle East and North America are the most likely to use ethane for feedstock, with each region using it for 60% of their total feedstock. NE Asia and NE Europe both use naphtha as feedstock most often, accounting for about 80% of the regional feedstock. (Krungsri Research)
#9. 63 million tons of benzene are manufactured each year, making it the most common hydrocarbon produced from a naphtha input. About 20% of benzene is used to produce cumene, which is a staple of the packaging industry. (Krungsri Research)
#10. Polyethylene is the most common plastic polymer produced by the petrochemical industry. Capacity is expected to rise 5% globally, with 70% of the products produced going to the packaging industry. (Krungsri Research)
#11. 65% of the propylene that is produce each year comes from LPG, coal, and naphtha. It is most commonly used by the automotive industry for vehicle manufacturing. (Krungsri Research)
#12. Aromatic carbons are produced from naphtha, with almost 70% of xylene coming from oil refineries. Most xylene, however, is used to produce polyester or PET. (Krungsri Research)
#13. 50 million tons of polyvinyl chloride, or PVC, is produced globally each year. 70% of the PVC that is manufactured goes to the construction industry. It is produced by the petrochemical industry through chloride or ethylene. (Krungsri Research)
#14. About 11 million tons of polystyrene are produced each year, which is used by severe industries as a downstream aromatic hydrocarbon. (Krungsri Research)
#15. In the United States, there were 141 operable refineries within the petrochemical industry, offering a total crude distillation capacity of 18.6 million barrels per day. In 2017, total refining capacity within the U.S. increased by 300,000 barrels per day. (American Fuel and Petrochemical Manufacturers [AFPM])
#16. In 2015, North America held a 16.5% share of global chemical sales. Asia held a 61% market share. (Ernst and Young)
#17. Except for Germany, the United States is the largest exporter of chemical goods in the world today. In 2016, the total value of all chemical exports reached $185 billion, with most exports headed to the Asia-Pacific region. (Statista)
#18. In the petrochemical industry as a whole, about 810,000 people have direct employment opportunities, though this is about 20% lower than what it was in the 1990s. The average worker in the industry earns about $23 per hour. (Statista)
#19. In 2016, nearly $91 billion was spent on research and development within the chemicals industry, a figure which has doubled since 2007. (Statista)
#20. The gross operating surplus for all U.S. chemical manufacturing was $271.1 billion in 2016. The total value of chemical shipments originating from a U.S. location total more than $797 billion. (Statista)
#21. China’s petrochemical industry has seen revenue growth of 86.6% since 2000, reaching a total of CNY 9.5 trillion in 2015. (Flanders Investment and Trade)
#22. The demand for isoprene in China has risen by nearly 40% since 2014, far outpacing demands for other chemicals. Four other chemicals have demand increases of more than 15%: R32 (24%), R125 (24%), PPS (17%), and resins (16%). (Flanders Investment and Trade)
#23. The capacity utilization rate in China for the processing of crude oil stood at 66% in 2014. Only sodium hydroxide, diammonium hydrogen phosphate, sodium carbonate, and urea had capacity utilization rates above 80%. (Flanders Investment and Trade)
#24. There are 196 petroleum refineries in China, offering an average capacity of 3.65 million tons per year per refinery. That is about 50% of the global average. (Flanders Investment and Trade)
#25. The output capacity for ethylene in China was 20.79 million tons, with an output volume of 18.5 million tons. Import volume was about 1.5 million tons. (Flanders Investment and Trade)
#26. China had an output volume of 18.75 million tons, but an equivalent consumption volume of 27.8 million tons, for propylene produced by the petrochemicals industry. (Flanders Investment and Trade)
#27. The output capacity for EVA copolymer in China is 600,000 tons per year. About 65% of the demand for this product is met by imports. (Flanders Investment and Trade)
#28. Output capacities for polypropylene in China were 19.3 million tons, with an output volume of 13.8 million tons. More than 100 companies are currently active in this sector of the petrochemicals industry, yet China experiences a shortfall of almost 65,000 tons of high-end polypropylene each year to meet demands.
#29. There are more than 80 methyl ether production companies located in China, offering a gross annual output of 13.5 million tons. The gross output volume, however, was just 5 million tons in 2014. About 97% of the methyl ether that is produced in China is used as fuel and is treated as a replacement for LPG or coal. (Flanders Investment and Trade)
#30. 8.5 million tons of ethylene equivalent consumed in China each year comes from the Middle East. Another 8.3 million tons comes from the APAC region. Only 1.4 million tons of ethylene equivalent originates in North America. (Flanders Investment and Trade)
#31. The vast majority of ethylene production in China comes from steam cracking, where 20.5 million tons were generated in 2014. In comparison, less than 5 million tons was produced from methanol to olefin. (Flanders Investment and Trade)
Petrochemical Industry Trends and Analysis
The petrochemical industry may have a stable profile, but they have a product that is based on a volatile commodity. Crude oil prices typically need to be in the $50 per barrel range for most producers to find their breakeven point. In some markets, that price may need to be above $60 per barrel.
As oil and natural gas prices have begun to recover, the industry has begun to see better revenue footing. Most of the declines in the average revenues from the industry occurred in late 2014 and throughout 2015. The remainder of that time period had the industry on solid ground. Through at least 2019, the industry should be able to stay that way, enjoying healthy demand levels as conditions improve.
Global cycles for this industry tend to occur every 6-9 years, so assuming that the 2014 drop was the beginning of a new cycle, changing circumstances in 2020 could create future uncertainties. Political instability, lower oil demand levels, and less natural gas consumption could create similar conditions to those seen in 2014.
Expect petrochemicals to have a global market size of $1 trillion by 2028, assuming current trends remain the same.
The petrochemical industry will always have products that other industries will demand. As an industry, the only real question is one of profitability – and that is dictated by how much the price of oil happens to be.