In last decade, China has established itself as the largest petrochemicals market, owing to impressive demand from its large population creating an astonishing growth in demand for petrochemicals in China. It is now world’s largest petrochemicals consumer, surpassing the US. Government focus on industrialization and urbanization has led to all-round development of Chinese petrochemicals industry.
Demand of basic petrochemicals and major plastics (ethylene, propylene, butadiene, benzene, toluene, xylenes, methanol, polyethylene, polypropylene, PVC, polystyrene, expandable polystyrene, acrylonitrile butadiene styrene, polyethylene terephthalate resin) was 124.703 Million Metric tons per annum (MMtpa) in 2010 and is expected to increase to 215.033 MMtpa by 2015 at a Compound Annual Growth Rate (CAGR) of 11.5%. China has tried to match the production capacity to the growing demand, and there has been substantial increase in its production capacity. The growing demand for petrochemicals in China has made it the growth engine of the global petrochemicals industry. It is therefore crucial for petrochemical producers to have a presence in China.
The production of basic petrochemicals and major plastics increased from 29.475 MMtpa in 2000 to 95.952 MMtpa in 2010 at a CAGR of 12.5%, and is expected to increase to 164.642 MMtpa in 2015. The production growth in China is falling behind the demand growth necessitating the construction of more petrochemical plants. Companies from other regions can use this opportunity to set up joint ventures.
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GlobalData, the industry analysis specialist, has released its latest research, “Joint Ventures in the Petrochemical Industry – Key Strategy to Manage Globalization”. The study, from the company’s Petrochemical Research Group, provides an in-depth analysis of the joint venture trends in the global petrochemical industry. It explains the reasons for the increase in joint ventures in the Asia-Pacific and Middle East region. The study provides a detailed analysis of recent joint venture deals, as well as details of important active companies in joint venture deals across the globe. It also provides historic and future forecasts of basic petrochemicals and major plastics production in China and the Middle East. The report highlights the importance of joint venture deals to manage globalization. The report is built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis by GlobalData’s research team of industry experts.
The petrochemicals industry has undergone rapid changes in last decade and is now in a transition phase. Globalization has changed the face of global petrochemicals industry as China surpassed North America and Europe as the largest consumer of petrochemicals, and Middle East has emerged as the most economical region for petrochemicals producers. The North American and European markets have both saturated, with the recession further depressing demand. A focus on scale economy and geographic expansion has led to the consolidation of the global petrochemical industry, and producers are looking to diversify their product portfolios and reach demand-rich geographies. The global economy is highly integrated, and competition is not limited to a single geography. These effects of globalization have led to an increased number of partnerships between companies. Since European and North American producers are grappling with declining demand, they are setting up joint ventures with Asian or Middle- Eastern companies to get a competitive advantage.
China has established itself as the largest petrochemicals market, owing to impressive demand from its large population. The demand for basic petrochemicals and major plastics increased from 42.051 MMtpa in 2000 to 124.703 MMtpa in 2010 at a CAGR of 11.5%, and is expected to increase to 215.033 MMtpa in 2015 at a CAGR of 11.5%. Growing Chinese demand provides joint venture opportunities for producers from other regions. The Middle East has also become an important destination for petrochemicals production. Middle-Eastern governments provide subsidies on the feedstocks used for petrochemicals production, which makes production significantly cheaper compared to other regions. This has made it difficult for producers in other regions to compete. To deal with this situation, companies from other regions are partnering with Middle East companies to get a cost advantage. Joint ventures in these two regions are expected to increase in next five years, as many of the planned projects in these regions are established under joint ventures.
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