Issue 21/2020 - Global Chemicals Quick Facts

Latin American petrochemical producers are still short of raw materials

Despite continued growth in the domestic market, petrochemical investment in Latin America has stalled
.
That's partly because petrochemical producers in the region face stiff competition
from large petrochemical plants along the U.
S.
Gulf Coast.
Over the past decade, large petrochemical producers on the U.
S.
Gulf Coast have gained abundant access to low-cost feedstocks and energy, with significant long-term advantages
in scale and upstream and downstream integration.
During the same period, most petrochemical producers in Latin America were forced to import U.
S
.
ethane to feed their crackers.
Cleantho de Paiva Leite Filho, head of business development at Brasco Petrochemical in Brazil, said the main problem facing the company's current petrochemical projects is the shortage of raw materials, which is also a problem
for most petrochemical producers in Latin America.
Most pyrolysis plants in the region have been forced to find solutions to obtain alternative feedstocks
.

U.
S.
Gulf Coast petrochemical expansion boom "suspended"

As the new crown pneumonia pandemic curbed the rapid growth of plastic demand, overcapacity in the market, and a sharp decline in profits, many companies suspended the investment of billions of dollars in the US Gulf Coast petrochemical expansion project, and the new round of petrochemical expansion boom in the United States pressed the "pause button"
.
Oil giant Saudi Aramco, chemical producer Lyondel Bassel and Chevron Phillips, a joint venture between Chevron and Phillips 66, have postponed three petrochemical projects
in the Gulf of Mexico with a total investment of $17 billion.
Taiwan's Formosa Plastics Group and Thailand's PTT Global Chemical have also delayed plans for
new large-scale petrochemical projects in the United States.
Dow Chemical has pledged to cut spending away from building large petrochemical facilities and instead focus on lower-risk, value-added investments
that deliver faster returns.
The company's chief executive, Jim Feitling, said in an interview that the coronavirus pandemic has only accelerated the company's transformation
.

The global refining industry will embrace capacity consolidation

Recently, OPEC said in its "World Petroleum Outlook Report" that although the epidemic will slow the pace of refinery expansion, the market will still see serious refining overcapacity
in the next few years 。 Global refining capacity is expected to add about 3.
8 million b/d by 2022, but the market does not need such capacity after 2022; Approximately 2.
5 million b/d of refining capacity will be shut down globally by 2025, most of which is in Europe, the United States and Canada; Between 2025 and 2045, another 6 million b/d of refining capacity will be shut down globally to maintain sustainable refining capacity utilization
of about 80%.
Haris Aliefendic, an OPEC analyst who co-authored the report, said closing refining capacity is necessary in the medium term, but it will also be true in the long term, and we will see a wave of
refining capacity consolidation.

Demand for lubricants in ASEAN countries will grow steadily over the next decade

Klein predicts that the lubricant market in Southeast Asia will shrink this year, but will grow
steadily over the next decade as the region's economy continues to develop.
Southeast Asia's lubricant market is biased towards two-wheeler products and processing oils
.
Duta, project manager of Klein's energy practice, said that the demand for lubricants in the Association of Southeast Asian Nations will fall by 7%~17%
this year.
The company estimates that ASEAN countries including Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Vietnam, Singapore and Brunei consumed 3.
1 million ~ 3.
2 million tons of lubricants
in 2019.
Duta said that the economies of ASEAN countries will recover in the coming years, and the momentum of industrialization and urbanization will accelerate
.
This will also stimulate the steady growth of
the lubricant market in the region.