The petrochemical industry plays a pivotal role in the global economy, transforming raw materials derived from oil refining and gas processing into a myriad of products that are integral to our daily lives. These products range from plastics, synthetic fibers, and fertilizers to adhesives, dyes, detergents, and synthetic paints and coatings.
In 2022, the petrochemical industry marked its significance in the global economy, accounting for more than 12.1 percent of oil demand within OECD countries. The same year saw the market value of petrochemicals surge to 584.5 billion U.S. dollars, reflecting the industry’s expansive reach and the persistent worldwide demand for its products.
Downstream industries use the basic petrochemicals produced in upstream industries as inputs and convert them into finished products such as plastics or synthetic fibers. For instance, a major part of ethylene production is used to manufacture polyethylene, a common plastic material that accounts for roughly 30 percent of global thermoplastic production. The market value of polyethylene stood at 168.4 billion U.S. dollars in 2022 and is expected to reach almost 205.29 billion by 2030.
Likewise, forecasts point to an increase in the petrochemical market in the next years. By 2030, the petrochemical industry’s global market value is expected to reach over one trillion U.S. dollars.
The growing demand for these products, along with a decline in the consumption of fossil-derived liquid fuels in the transportation sector, could make petrochemicals the largest driver for oil demand in the near future and as such it is important to note that the expansion of the petrochemical industry comes with significant environmental implications. The projected increase in production capacity and market value of this essential sector must be balanced with responsible environmental stewardship to ensure that the industry’s progress does not come at the cost of ecological health and aligns with global efforts to mitigate anthropogenic environmental change.
How is the petrochemical industry structured?
The petrochemical sector can be roughly divided into upstream and downstream processing. Upstream industries convert feedstocks such as naphtha or natural gas into basic petrochemicals, namely olefins, aromatics, and methanol. Olefins include ethylene, propylene, and butadiene, while aromatics comprise benzene, toluene, and xylene. Ethylene is the most widely produced basic petrochemical worldwide. In 2022, the global production capacity of ethylene amounted to 225.52 million metric tons.Downstream industries use the basic petrochemicals produced in upstream industries as inputs and convert them into finished products such as plastics or synthetic fibers. For instance, a major part of ethylene production is used to manufacture polyethylene, a common plastic material that accounts for roughly 30 percent of global thermoplastic production. The market value of polyethylene stood at 168.4 billion U.S. dollars in 2022 and is expected to reach almost 205.29 billion by 2030.
Petrochemical industry outlook
The production capacity of petrochemicals worldwide reached almost 2.4 billion metric tons in 2023. By 2030, it is expected to grow significantly, with China, India, and Iran the countries with the largest petrochemical capacity additions announced or planned. China alone plans to add an additional capacity of 134 million metric tons per year, dominating the market in the medium term.Likewise, forecasts point to an increase in the petrochemical market in the next years. By 2030, the petrochemical industry’s global market value is expected to reach over one trillion U.S. dollars.
The growing demand for these products, along with a decline in the consumption of fossil-derived liquid fuels in the transportation sector, could make petrochemicals the largest driver for oil demand in the near future and as such it is important to note that the expansion of the petrochemical industry comes with significant environmental implications. The projected increase in production capacity and market value of this essential sector must be balanced with responsible environmental stewardship to ensure that the industry’s progress does not come at the cost of ecological health and aligns with global efforts to mitigate anthropogenic environmental change.
