Petrochemical Industry to 2015 - Increased Demand from China will Drive Recovery by rgunnam


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									Petrochemical Industry to 2015 - Increased Demand from China will Drive Recovery

Decline in End Use Sectors During the Recession Weakened the Petrochemicals Industry

The slowdown in the end use sectors resulted in a reduction in the demand for downstream
petrochemicals across the globe. Automotive and construction sectors across the globe were paralyzed
due to stagnant consumer spending. Demand in construction and its allied industries remained low in all
the developed nations. A gloomy economic scenario and the bursting of the US housing bubble made
customers reluctant to invest in real estate. The automotive sector has been the biggest casualty of the
economic downturn, where the supply has outstripped the demand. In 2009, automotive production in
the US and Canada declined by 34.1% and 28.4% respectively. The European producers were also hit
hard by the financial crisis and subsequent economic downturn. Production in France, Germany and the
UK declined by 20.3%, 13.8% and 30.3% respectively. Steady growth in the packaging industry was also
halted by the recession.

Lower sales forced manufacturers to cut production levels, with lower requirements for petrochemicals.
Total demand for basic petrochemicals (ethylene, propylene, butadiene, benzene, toluene and xylenes)
and major plastics (polyethylene, polypropylene, polyvinyl chloride, polystyrene, expandable
polystyrene and acrylonitrile butadiene styrene) in North America and Europe declined by 6.5% and
8.2% respectively.

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GlobalData, the industry analysis specialist, has released its latest research, “Petrochemical Industry to
2015 - Increased Demand from China will Drive Recovery”. The study, which is an offering from the
company’s Petrochemical Research Group, provides an in-depth analysis of the post-recession Chinese
petrochemical industry, with demand and production forecasts and key trends until 2015. It provides
the historic and future forecasts of basic petrochemicals and polymers capacity, production and demand
in China. The study provides detailed analysis of China’s role in helping the global petrochemicals
industry to recover from slowdown. The report presents export trends of major petrochemicals
producing countries to China during the slowdown and initial recovery phase. In addition, the report
discusses major foreign investments in China. It also describes the growth strategies adopted by major
companies in the recovery phase. Overall, the report presents a comprehensive analysis of the Chinese
petrochemical market and its trade and collaboration with various countries during the economic crisis
and the recovery phase. 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 Chinese petrochemicals industry is the fastest growing petrochemicals industry in the world. As with
other petrochemical markets, the Chinese petrochemicals market stumbled as recession slowed down
the growth, but stimulus packages and strong demand from its large domestic market helped to revive
the petrochemicals industry. The Chinese petrochemicals industry is imports-dependent, which will
continue to benefit the producers in other countries such as Saudi Arabia, Japan, Korea and the US.
These countries can extend their excess supply to the Chinese market. The fast growing Chinese market
is attracting foreign producers who are entering into joint ventures with Chinese producers to establish
manufacturing facilities in China.
The demand for basic petrochemicals and major plastics in China has increased from 37.949 MMtpa in
2000 to 100.843 MMtpa in 2010, at a CAGR of 10.3%. The demand growth rate in China is high as
compared to the production growth rate, which makes it dependent on imports to meet its domestic
demand. The growing Chinese demand in the recovery phase provides opportunities to producers in
other countries who can export their excess supply to the Chinese market. Major Asian countries such as
Japan and South Korea have benefited most by exporting to China. In 2010, Korea accounted for 31% of
China’s total basic petrochemicals imports and 21% of major plastics imports, while Japan accounted for
23% of China’s total basic petrochemicals imports and 9% of major plastics imports.

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